Many of the prospective members of this union fancy the
CFA franc even less than the EU fancies their capricious and
graft-ridden economies. But an ECOWAS monetary union could constitute a
serious - and more economically coherent - alternative to the CFA franc
zone.
A neglected monetary union is the one between Belgium and Luxembourg.
Both maintain their idiosyncratic currencies - but these are at parity
and serve as legal tender in both countries since 1921. The monetary
policy of both countries is dictated by the Belgian Central Bank and
exchange regulations are overseen by a joint agency. The two were close
to dismantling the union at least twice (in 1982 and 1993) - but
relented.
II. The Lessons
Europe has had more than its share of botched and of successful
currency unions. The Snake, the EMS, the ERM, on the one hand - and the
British Pound, the Deutschmark, and the ECU, on the other.
The currency unions which made it have all survived because they relied
on a single monetary authority for managing the currency.
Counter-intuitively, single currencies are often associated with
complex political entities which occupy vast swathes of land and
incorporate previously distinct -and often politically, socially, and
economically disparate - units.
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