Single EA currency: Central bank governors push for cooperation

East African Community (EAC)

Central bank governors from East African Community (EAC) member states have urged stakeholders to be fully determined and cooperate during the interim period of having a single currency.

This transpired at the 18th Ordinary Summit for the EAC committee on monetary policy which brought together governors from member states over the weekend.

Among other things, the meeting looked into how to come up with legal systems and harmonise various institutional policies for implementation of the protocol on single currency.

The protocol for the establishment of the East African Monetary Union (EAMU) was signed by EAC Heads of State on November 30, 2013, in Kampala, Uganda, during the 15th Ordinary Summit. 
It provides for a wide scope of co-operation in the monetary and financial sectors among the partner states.

Speaking to journalists on behalf of the governors after the summit, the Bank of Tanzania Director, Arusha branch, Said Chiguma, said the meeting also emphasised on the importance of capacity building at various levels in member states. This would enable implementation of the protocol on time, he noted.

He said the meeting also emphasised the need to strengthen cooperation in economic policies within member states during the interim period.

“The governors reviewed the need for central banks of member states to implement monetary policy frameworks which are different from the current ones. They also noted the need to enlist monetary policies and those involving exchange rates,” Chiguma said.

Further, he said, they revised their intention to strengthen and harmonise payment systems within the EAC. 

They emphasised that there was need to have a payment system which is somehow similar, with a view of reducing the effect of the payment system.

“This includes reduction in the use of cheques in transactions involving huge sums of money and insisting on the use of improved payment systems that are both safe and effective. 

“The governors also showed the intention of enabling local currencies to continue being used within borders of respective countries,” he said.

The meeting took place under the chairmanship of Bank of Tanzania Governor, Prof Benno Ndulu. Other governors at the meeting were Prof Njuguna of Kenya, Jean Ciza of Burundi, John Rwangombwa of Rwanda and Louis Kasekende of Uganda.

Apart from them, Dr Enos Bukuku, the EAC Deputy Secretary General, also attended the meeting.

Under the Protocol, the EAC partner states are expected to surrender monetary and exchange rate policies to the East  African Central Bank, thus leading to a single currency regime within the region. However, national Central Banks will remain with the mandate of managing Fiscal policy, Fiscal discipline and harmonise them with other partner states' National Central Banks.

The protocol will be implemented over a ten-year period. This would subsequently lead to the creation of regional financial institutions whose mandate will be to stabilise financial prices as well as monitoring, surveillance, statistics and enforcing compliance of all other macro finance matters.

They include introducing a buffer for any emerging economic shocks. 

SOURCE: THE GUARDIAN