EAST AFRICAN MONETARY UNION PROPOSED

The East African Community (EAC) Monetary Union programme will be based on the European Union (EU) model where all the partner states will finally relinguish their currencies that will then be replaced with a singe regional currency.

"Our proposed approach is to have a regional currency to replace all the other national currencies," said an industry expert who requested for anonymity.

"The EAC Secretariat with support from the International Monetary Fund (IMF) is carrying out a study that will determine the conversion rates of each of the partner states," the expert told East African Business Week in an interview last week in Arusha, Tanzania.

The expert revealed that replacing the currency will be among the last stages but the Monetary Affairs Committee (MAC) subcommittee is working preparatory works on convergence while another subcommittee is working on currency and bank notes.

At the changeover the old national prices will be dropped and East Africans will remain with the new currency pinned on the products for selling rates. This means that in the meantime the national currencies will run parallel with the EA Currency while at the same time the banking system in the region is withdrawing the national currencies, as Uganda and Tanzania are currently doing with the introduction of the new notes.

"However this would require changes in the infrastructure for example Automated Teller Machines (ATM's) to accept the new notes and this is being addressed by the preparatory subcommittee on payments and settlements, and the currency and coins subcommittee," the expert explained.

To read the complete article, see: Single currency to replace national EAC currencies (www.busiweek.com/11/index.php?option=com_content&view=
article&id=407:single-currency-to-replace-national-eac-currencies&catid=95
:eac-issues&Itemid=1296)

Wayne Homren, Editor

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