Implications of the Eurozone Crisis for Monetary Unions in Sub-Saharan Africa.

Abstract

This paper draws implications from the 2010-2012 ‘Eurozone Crisis’ for currency and proposed monetary unions in Sub-Saharan Africa (SSA). A wide variety of currency and monetary unions exist, or are proposed, including ‘currency boards’. Most involve a potential mix of ‘core’ and ‘periphery’ countries without the prospect of prompt major trade gains. Most also mix net commodity exporters with net importers subject to asymmetric commodity price shocks. The experience of the Eurozone, with its well defined post crisis core and periphery countries, suggests that greater convergence and political and institutional preparation is required before a successful and fully fledged monetary union can be established.