Chapter 13: Banking and Monetary Policies

Title: Assessing the legal independence of central banks in the Common Monetary Area of Southern Africa

Reference: WORLD SUSTAINABLE DEVELOPMENT OUTLOOK 2006 pp. 418 - 429

Abstract/Summary: The Common Monetary Area (CMA) region in Southern Africa consists of 4 member countries, namely South Africa, Lesotho, Namibia and Swaziland and they have agreed to achieve, together with the other 10 countries of the South African Development Community (SADC), a monetary and economic union by 2016. The CMA and SADC will, if successful, eventually have a single currency and a common, independent regional central bank. This paper assesses the adequacy of the legal (de jure) independence of the four CMA central banks. This paper establishes political as well as economic criteria of the CBI concept and applies them to the four CMA central banks. The results of assessing the CBI of each of the four central banks are then utilised to indicate the extent to which each bank satisfies the criteria for legal independence and how they need to transform to converge to the accepted principles of a respected, independent central bank.

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