The Future of the CEMAC CFA Franc
Julius Agbor Agbor
A total of 80 currency boards have come into existence at some point since the mid-19th century, but to date only about 15 of them still exist, among which is the CFA franc monetary zone. The future sustainability of the CFA franc zone, to which the CEMAC CFA franc belongs, is increasingly questioned in the light of increasing asymmetries in exposure to external shocks, differential speeds of adjustment of the real exchange rate following shocks, differential impacts in economic fundamentals, and low levels of intra-regional trade and financial flows between CEMAC and WAEMU. For the CEMAC bloc of countries in particular, the future sustainability of the fixed exchange regime depends crucially on continued oil exports, which currently represent about 90percent of export revenues and 40 percent of GDP. Should oil reserves deplete in the near future or oil prices decline significantly, a substantial source of foreign reserves would be lost, thereby exposing the regime to collapse. Even without resource depletion, continued volatility in global financial markets is increasing the risks of collapse of the fixed exchange regime as oil and commodity price swings ignite currency speculation as well as render reserves much more volatile. Against this backdrop, the present study examines the stakes facing the CEMAC CFA franc, discusses the exit options from the currency board and makes recommendations towards a sustainable monetary policy framework for CEMAC countries going forward. The analysis points to the imperative of pursuing a full monetary union with a single CEMAC franc pegged to the U.S. dollar and further suggest that, like the experience of the eurozone, the CEMAC monetary arrangement can be best implemented only by complying with the principle of political union.
Keywords: Monetary Policy, Optimal Currency Areas, Exchange Rate, Franc Zone
The Eurozone Dynamic Cohesion: Convergence or Divergence
The long term economic dynamics of the Eurozone’s original 12 countries (Greece, Italy, Spain, Portugal, Ireland, Germany, Netherlands, Luxembourg, Belgium, Austria, Finland, France) is analyzed and compared. It is today increasingly recognized that the diverging competitiveness between the Eurozone members is at the root of the current crisis. But the competitiveness dynamics and its impact on the crucial fiscal and financial variables during the common currency existence is seldom analyzed and compared, especially as far as the different groups of countries (and/or different areas within the Eurozone) are concerned.
Keywords: Eurozone Convergence, Eurozone Divergence, Dynamism
Optimum Currency Area Criteria in the Greece
Creation of a monetary union in any region, regardless of the structure and level of development among countries, carries along certain costs and benefits. This paper explains Mundell’s concept of Optimum Currency Area and criteria that are needed to achieve it. Viewed through the prism of these criteria the EMU is currently far from achieving the OCA confirming the current crisis in Greece and other PIIGS countries. The example of Greece and shortcomings that contributed to its current crisis represents the biggest cost and a break-even point for the future of the monetary union. However, it is encouraging that Greece is not alone in its problems, since various funds for help have been established in a relatively short period of time. The reason for this is certainly a huge cost if any country should leave the union and the spillover effect that it would cause. Certainly serious transformations can be expected and the result should be a stronger union with better control from supra-national level.
Keywords: the European Union, the European Monetary Union, Common Currency, the Maastricht Treaty, Optimum Currency Area, European Financial Stability Mechanism
Positive Impact of Art as a Communication Instrument on Economical Productivity
There are many factors that affect economical productivity like climate, or like raw materials or like international relationships or like physchology of employers. Professional organisations or companies use different instruments to increase producticity on economy. Spiritual conditions of employers and employees are especially regarded for economical productivity recently. Though economy is mostly a concrete area, main component of economy is human and human need spiritual support and impacts in his life. It is known that spiritual support always feed human and provide him much energy. Employers or companies who are interested in art and who participate in artistic activities become more productive than others and attract people to their productions.
Keywords: Art, Production, Economy, Communication, Employer
Aksemsettin Mah. Kocasinan Cad.
Erenoglu Is Merkezi
Fatih – Istanbul, TURKEY
Email: [email protected]
This work is licensed under a Creative Commons Attribution 4.0 International License.