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Monetary Integration In Eastern And Southern Africa: Choosing A Currency Peg For Comesa
Author(s) -
Vieira Carlos,
Vieira Isabel
Publication year - 2013
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2012.01318.x
Subject(s) - currency , optimum currency area , liberian dollar , pound (networking) , international economics , economics , pound sterling , common currency , international trade , monetary economics , finance , world wide web , computer science
African countries involved in monetary integration projects have been advised to peg their currencies against an external anchor before the definite fixing of exchange rates. In this study, we estimate optimum currency area indices to determine, between four alternatives, which international currency would be the most suitable anchor for Common Market for Eastern and Southern Africa (COMESA) members and for a set of other selected African economies. We conclude that the euro and the British pound prevail over the US dollar or the yen; that the euro would be the best pegging for most, but not all, COMESA members; and that some of these economies display evidence of more intense integration with third countries, with which they share membership in other (overlapping) regional economic communities, than within COMESA.