Canadian Journal of Development Studies/Revue canadienne d études du développement · 1992 · 16 citations · 3 references
Social SciencesEconomicsFinanceBankingMacroeconomicsMonetary EconomicsCentral BankingCurrency IssuanceEconomic UnionInternational Monetary RelationsMonetary PolicyMonetary UnionAfrican UnionCentral Bank CreditCurrency Union MacroeconomicsFinancial Sector DevelopmentInstitutional ArrangementsRegional Currency UnionsRegional Monetary UnionsUnion
ABSTRACT The West African Monetary Union comprises seven countries with a common central bank (the BCEAO), common currency, and pooled international reserves. This paper outlines the institutional features of the Union, and argues that although individual member countries are free to borrow abroad, or increase domestic credit based on local bank deposits, the BCEAO is still the primary determinant of credit and money supply in the Union. The French guarantee of convertibility of the Union's currency, the CFA Franc, does not impose significant costs on the French treasury. Financial development in the region does not lag that in the countries of the former sterling zone. Overall, it is argued that while the members of the Union share a common central bank, and are constrained by a fixed exchange rate, the benefits of membership in the Union should not be underestimated.
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