Modelling Monetary Union in S outhern A frica: Welfare Evaluation for the CMA and SADC

This paper proposes a quantitative assessment of the welfare effects arising from the C ommon M onetary A rea ( CMA ) and an array of broader groupings among S outhern A frican D evelopment C ommunity ( SADC ) countries. Model simulations suggest that ( i ) participating in the CMA benefits all members; ( ii ) joining the CMA individually is beneficial for all SADC members except A ngola, M auritius and T anzania; ( iii ) creating a symmetric CMA ‐wide monetary union with a regional central bank carries some costs in terms of foregone anti‐inflationary credibility; and ( iv ) SADC ‐wide symmetric monetary union continues to be beneficial for all except M auritius, although the gains for existing CMA members are likely to be limited.