Revised Plan of Single Currency for West Africa
(ECOWAS)--The Economic Community Of West African States (ECOWAS) convergence council, comprising Ministers of Finance and the Governors of Central Banks of member states, on Monday, 25th May 2009 approved a revised road map for the realisation of a single currency for West Africa by 2020.
The approval followed the adoption of the report of the inter-institutional working group on the ECOWAS single currency that articulates a clear, concise and comprehensive strategy for realising a single currency for the region. The map outlines activities to be undertaken ahead of the new date including the review and harmonisation of the convergence criteria, the harmonisation of statistics, domestic policies and the legal, accounting and statistical frameworks of public finance.
Between 2009 and the first quarter of 2013, the map envisages the harmonisation of the regulatory and supervisory framework for banking and other financial institutions, the establishment of a payment system infrastructure for cross border transactions, the completion of the payment system infrastructure in Guinea, The Gambia and Sierra Leone and the completion of the ongoing integration of the financial markets of the region. By 2014, it is expected that the legal instruments for the creation of the West African Monetary (WAMZ) zone comprising Ghana, The Gambia, Guinea, Sierra Leone and Nigeria, would have been ratified followed the same year with the creation of the bank for the WAMZ zone, the WAMZ secretariat and the West African Financial Supervisory Agency. Monetary union for the countries of the zone is scheduled to be realised on or before 2015 before the introduction of Eco, their common currency in January 2015 to be followed by the withdrawal of the national currencies of the five constituent member states.
Subsequently, the processes for the merger of the two currencies to create a single currency will begin, including the introduction of a supplementary act to the revised ECOWAS treaty to provide a legal instrument for the preceding monetary union, three years before the launching of the single currency. This will culminate in 2020 with the introduction of a regional currency, preceded by the launching of monetary union, the establishment of a regional central bank and finally the withdrawal of national currencies.
The council urged Cape Verde and Liberia, the two member states that are neither member of the CFA zone not in WAMZ, to join one of the two monetary zones and the ECOWAS Monetary Cooperation programme for the realisation of the single currency. They urged member states to ‘implement prudent economic and financial policies aimed at cushioning the impact of the ongoing global economic and financial crises on their economies, particularly, the vulnerable financial sector,’ and pursue appropriate monetary and fiscal policies while implementing rigorous structural and institutional policies under the aegis of the ECOWAS multilateral surveillance mechanism.
It further directed the ECOWAS Commission to continue to collaborate with other regional institutions and member states involved in the ECOWAS Monetary Cooperation programme to ensure the timely and effective implementation of the road map. Moreover, it urged the Commission to assume ownership of the single currency initiative, prescribe minimum standards within the common strategy that will involve the harmonisation at a sub-regional level of the various components.
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