West Africa’s Eco is the name that WAMZ, or West African Monetary Zone has proposed to ECOWAS, or Economic Community of West African States for a common national currency. It was intended to be merged with the CFA Franc (i.e. a currency used by French-speaking member nations) eventually, but the plan has yet to be finalized. Since the currency’s development is rather interesting, you may want to learn trivial and even rare information about it; for a currency trader, especially, the facts may come in handy.
- It is regulated by WAMI, or the West African Monetary Institute – a group that was set up solely for the establishment of a West African currency.
- Its conception was first discussed by the Multi-lateral Surveillance Commission of ECOWAS under the authority of Lasssane Kabore; since the department head expressed dismay over the average inflation rates of all African currencies as a whole, he, along with his committee, made it a goal to establish a common currency.
- The plan was to introduce it in 2003, but for a number of times, its official distribution was postponed; international financial markets were supposed to be informed about its existence in 2005, 2009, 2010, and 2014.
- For its successful implementation, completion of the FPCC (or the Four Primary Convergence Criteria) needs to be achieved. The list includes: (1) maximum 10% deficit-financing from the central bank, (2) three months’ cover of GER, or Gross External Reserves, (3) low inflation rate at the year’s end, and (4) maximum 4% fiscal-deficit of the GDP, or Gross Domestic Product.
- As supplement for its successful implementation, completion of the SSCC (or the Six Secondary Convergence Criteria) needs to be achieved. The list includes: (1) stability of the real exchange rate, (2) positivity of the real exchange rate, (3) liquidation of existing domestic default payments or prohibition of incoming ones, (4) maximum ratio of 35% for wages to taxes, (5) minimum ratio of 20% for public investments to taxes, and (6) minimum ratio of 20% for taxes to the GND.
- A reason why its establishment has yet to be approved is that support from the majority of the fifteen member nations of ECOWAS wasn’t received. The list of member nations includes: Ghana, Guinea, Liberia, Mali, Nigeria, and Senegal.