East Africa begins hard talks on common currency while Eurozone is in Crisis
Members of the East African Community (EAC) have taken up discussions on details for the founding of a common regional currency, which is expected to be introduced by the end of 2012. While the European Union these days seems likely to lose its function as a global role model for stability and economic growth based on a monetary union, the representatives from Tanzania, Kenya, Uganda, Rwanda and Burundi explained their desire to find concrete solutions during their 10 day meeting in Entebbe, Uganda, directly refering to it’s European counterpart. One object of debate is the name for the regional currency.
In the face of giving the regional currency a name the project’s major goals such as the reduction of costs and risks of transacting business across the region’s national borders as well as to counter the current challange of deflation, appear almost second-rate. Still, the financial ministers from the five member states are expected to formulate specific arrangements for the proposed East African Central Bank. Among those settings are the deliberation of the determination of conversion rates, conversion and redenomination of existing legal instruments as well as the distribution of bank notes and coins.
Before issuing such details EAC Deputy Secretary Minister, Enos Bukuku, stated:
The Eurozone has given us lessons about the importance of harmonization and coordination of fiscal policy in the Monetary Union and therefore the choice of macroeconomic framework that this meeting will dwell on should provide some answers to appropriate interactions between fiscal and monetary policies in the context of a monetary union.”