The viability of regional monetary integration : the case of the Southern African common monetary area.
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Date
1992
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Abstract
Through mutual trade in goods and assets, economies become closer linked - integrated - and
this changes the way these economies react to their own and each other's economic
policy and disturbances. Recognising this, the countries may chose to enter into integration
arrangements which facilitate goods and asset trade and may permit co-ordinated action
in the policy sphere. A monetary integration arrangement unites more closely the monetary
systems of a number of countries, and this may be in the absence or presence of a broader
economic integration arrangement (for example a common market). This thesis examines
aspects of the integration arrangement known as the Common Monetary Area (CMA),
between South Africa, Lesotho and Swaziland.
Chapter 2 outlines theoretical considerations of the desirability of monetary integration,
while Chapter 3 uses a model to analyse the effects of goods and asset market integration
on the economic policy and disturbance transmission of two countries. Chapter 4 describes
the institutional and historical setting of the CMA, as well as the reasons behind the
changes made to the legal arrangement in 1986. Chapter 5 presents a critique of an attempt
to analyse the CMA as an optimal currency area, while Chapter 6 analyses the state of
broader economic integration over the CMA, and assesses its implications for monetary
integration. Chapter 7 addresses empirically the question of the degree of asset and goods
market integration and explains the implications for monetary integration, while chapter
8 analyses the situation of Botswana, a non-CMA member, to assess its importance for the
CMA and its relation to the debate surrounding the continued existence of the CMA.
The conclusion that is reached is that, given extant levels of goods and asset market
integration, the members of the CMA (especially the smaller members) would benefit from
greater joint policy making and policy co-ordination, i.e. greater monetary unification.
Description
Thesis (M.Com.)-University of Natal, 1992.
Keywords
Money., Theses--Economics.