Eco 2020: Monetary Policy for the Future Central Bank and Economic Development in West Africa

N’Djibio Kokou Charlemagne,Sylla Doucouré Karima

doi:10.11648/j.ijber.20211001.17

N’Djibio Kokou Charlemagne, Sylla Doucouré Karima

Open Access

https://doi.org/10.11648/j.ijber.20211001.17

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Abstract

In a context where international political and diplomatic weight also weighs in the game of international monetary cooperation, regional monetary policy can offer to West African countries an opportunity to strengthen their individual and collective position in terms of development, within international cooperation. This vision, based not on the contribution to the resolution of internal monetary problems, but envisaged as an instrument to stem monetary shocks coming from the outside, has not been sufficiently recognized and analyzed, both in the theoretical literature and in considerations of policy makers. Better consideration of this dimension could help steer the debate on monetary integration in the right direction: that of rapid progress towards the single currency. The general objective of this paper is to propose to the political powers, a common monetary policy, able to inject the new dynamism into the economic development of ECOWAS (Economic Community of West African States) countries. This general objective is divided into two specific objectives: analyze the theoretical, economic and political challenges of ECOWAS monetary policy; and to propose a monetary policy adapted to the economic contexts of the ECOWAS countries, and able to inject the new dynamism into the economic development. To achieve these objectives, we carried out a documentary review of the monetary policies currently underway in the countries of West Africa. Next, we relied on the Autoregressive Vector Model with Panel Interactions (IPVAR), following the methodology proposed by Towbin, Pascal & Weber, Sebastian. An effective monetary policy of the future ECOWAS central bank can boost the development of West African countries.

Highlights

The problem of economic integration in general and monetary integration in particular is not new
The rise of regionalism in the world, coupled with the project of adopting a single currency in Africa since the creation of the African Union (AU), require that we look at the potential effects of such a currency in the African Regional Economic Communities (REC)
The general objective of this paper is to propose to the political powers, a common monetary policy, capable to infuse a new dynamic into the economic development of the Economic Community of West African States (ECOWAS) countries

Summary

Introduction

The problem of economic integration in general and monetary integration in particular is not new. It goes back to monetary arrangements in Europe at the end of the Second World War and to the debate on exchange rate policy in Canada [1,2,3]. While it is generally accepted that the single currency cancels out the exchange risk and the costs of hedging against this exchange risk, the fact remains that it acts as a bilateral trade subsidy for the countries which have adopted it. The decision to create (or join) a monetary union depends on the expected positive externalitie

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