AU moves to create Central Bank, single currency in 2020

Addis Ababa, Ethiopia (PANA) - The African Union (AU) has decided to create an African Monetary Institute to study policies that must be put in place before an African Central Bank and a single currency can be created for the continent, a senior AU official said here Monday.

AU Commissioner for Economic Affairs Maxwell Mkwezalamba said an African Central Bank, to be headquartered in Nigeria, would enable most African countries to trade freely and help to reduce the exchange-rate related losses incurred by most African traders.

Mkwezalamba said an expert panel was currently working to develop strategies for the creation of the continental Central Bank, while more drastic economic convergence plans were still being worked out.

The African Monetary Institute will spearhead studies on key benchmarks that must be fulfilled before a road map can be agreed upon for the common currency and the Central Bank.

“An African Central Bank is not an easy thing. They have to get all the countries to agree to this issue because it involves a certain loss of sovereignty. We are having heated discussions with the Association of the African Central Bank Governors on the issue,” Mkwezalamba told journalists.

Speaking on the sidelines of the AU’s Permanent Representatives Committee (PRC) meeting, which opened here Monday to discuss preparations for the main Summit of heads of state (29-30 January), the AU official said a series of sanction measures must also be agreed upon before the Central Bank is created.

“We need to agree on economic convergence criteria, a budget-deficit ratio of 3% and inflation targets to be accepted and the free movement of people, goods and capital,” he said.

The plans for an African Central Bank come in the wake of the problems caused by the European debt crisis, which is expected to affect African economies on a massive scale due to the trade links.

“It is a delicate process. A strategy is being worked and decisions have to be made. They (experts) have made substantial progress,” the AU Commissioner said.

Mkwezalamba said a decline in the rate of foreign investments was expected in Africa as a result of the European debt crisis.

He said the AU was currently holding discussions with the various African nations to ensure the investment environment remains vibrant and attracts more income into Africa, but warned that it would be impossible to create a functional Central Bank if free movement was not guaranteed for foreign goods and services within the continent.

“The European debt crisis gives us lessons to establish the African Central Bank and the single currency. Our work on this bank would take into consideration those issues, micro-economic unity,” he added.
-0- PANA AO/SEG 23Jan2012

23 january 2012 16:33:37

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