Africa wants to have its own euro – a common currency for the continent. So far 9 countries are giving the green light to the project. There is also the name of the currency – eco.
According to the declarations, the new common currency is to free Africa from monetary ties with France and replace the West African franc. Significantly, its convertibility is to be guaranteed by the euro, not the dollar.
Africa will have an eco
The countries of the Economic Community of West African States (ECOWAS) have already signed a declaration in Nigerian Abuja on the creation of a new eco currency at the end of 2019. The continental media, such as The Africa Report, have already written about the issue.
In the first days of 2020, the African daily also wrote that the Ghanaian authorities are largely behind the project. The country is not a member of the West African Economic and Monetary Union. This does not prevent it from being one of the strongest economies in the region.
Ghana convinces politicians from other countries of its vision. In total, already 9 countries are ready to introduce eco, the common coin for the region. Outside Ghana they are: Benin, Burkina Faso, Guinea-Bissau, Mali, Niger, Senegal, Togo and Ivory Coast.
“The Eco is to free Africa from monetary ties with France and replace the West African franc.
– adds a portal. The guarantee of eco-changeability is to be the euro, not the franc or the dollar.
The eco form
However, it is not clear what form eco will ultimately take. Will it be a digital currency (based on blockchain?), only a settlement unit (something like the Bankor, which John Keynes thought about decades ago) or a fiat currency like the euro.
The four basic criteria that every country that wants to have an eco must meet are:
- A single-digit inflation rate at the end of each year.
- A fiscal deficit not exceeding 4% of the GDP.
- The level of financing of the budget deficit from the central bank’s resources does not exceed 10% of tax revenue.
- The value of reserves covering the cost of imports for at least 3 months.
Africa – despite appearances and stereotypes – is a place where many people, including in poorer regions, own smartphones, so introducing digital currency there would be a real idea. This is largely due to the fact that banks do not have enough branches on the continent. The transfer of funds in Africa is possible mainly through platforms such as Jack Dorsey’s Square.