Project African Monetary Reform (PAMR)

Project African Monetary Reform (PAMR) – post 1

The blogoshere is full of debates about US monetary policy and the mistakes of the ECB are also hotly debated. However, other than that there is really not much debate in the blogoshere about monetary policy issues in other countries. I have from I started blogging said that I wanted to broaden the monetary debate and make it less US-centric. Unfortunately I must say I also tend to write a lot about US monetary policy and there is no doubt that most of my readers are primarily interested in US monetary affairs. However, I still want to have a broader perspective on monetary theory, policy and history. Therefore as of today I am launching Project African Monetary Reform (PAMR).

I have no clue where PAMR will lead me other than I have a large interest in the African continent and it’s economies so why not combine it with my interest in monetary policy? My regular readers will know that I already have produced a number of posts related to African monetary issues. PAMR as such will not be a major change and I will not promise any regularity in my posts in the PAMR “series”, but I hope PAMR can be a framework within which I can write a bit more on African monetary matters. I will not get into the business of forecasting central bank behavior and market movements (I spend time on that kind of thing in my day-job), but I will hope to contribute to the discussion about monetary reform in Africa. Something still badly needed in many African countries.

In the process of studying monetary reform issues in Africa – we might even learn some good lessons for more “developed” economies like the US and the euro zone. So even if you are not interested in what is going on in Africa you might learn from tracking PAMR.

I therefore also would like to invite other economists, academics and policy makers with interest in African monetary reform to get in contact with me so we might be able to build a network of people with such interests. Furthermore, I would as always welcome guest posts concerning African monetary issues from other economists with special knowledge or interest in African monetary reform. I can be contacted at

Furthermore, I will invite you my dear readers to give me suggestions for the next post in the PAMR series. I want to take a look at the monetary policy set-up in a “random” African country. You my dear readers will make the choice on what country I should start with. But I rule out writing something on the three large ones: South Africa, Nigeria and Egypt. You can write the suggestion here or drop me a mail. I am all hears.

Some of my previous posts related to African monetary issues:

The spike in Kenyan inflation and why it might offer a (partial) solution to the euro crisis

“Good E-money” can solve Zimbabwe’s ‘coin problem’

M-pesa – Free Banking in Africa?


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  1. anon

     /  July 7, 2012

    A post on the CFA franc currency union would be very interesting, since these countries are essentially pegged to the EUR (as is Morrocco). How are these countries doing economically, when compared with their neighbors?

    • Anon, that is an excellent idea.

      It is interesting that the CFA countries apparently have done relatively well through all this. I will look into writing something about that.

      Thanks for the input.

  2. JP Koning

     /  July 8, 2012

    Lars, excellent idea.

    I was also going to suggest something on the CFA, since the topic of monetary unions is currently in vogue, but someone has already beat me to it.

    The common criticism of the Euro monetary union is that it lacks a fiscal union, yet the CFA monetary union is still functioning after 50 years without being complemented by a fiscal union.

    • JPK,

      See something good is already coming out of this project. It would be very interesting indeed to see why the CFA has “survived” for so long. I have two preliminary ideas. 1) The CFA franc has actually been devalued at a number of occasions. 2) There is not real fiscal issue that most of the public expenditure in any West African is funded by foreign donors. But I look forward to getting back to this.

  3. Some ideas:

    (1) Look at the correlation between inflation rate and some index of development (per capita PPP income or HDI). I predict strong and negative, obviously driven by an underlying variable of institutional strength and maturity.

    (2) Do these banks target inflation, exchange rates, or perhaps nothing in practice? I would be interested in a broader across-Africa comparative monetary policy analysis (and of outcomes). By its abstract, IMF study looks to be of potential help:

    (3) South Africa also has a smaller monetary union with Namibia and two tiny landlocked countries. Perhaps worth a look?

    (4) Given the low issuance and illiquidity of African gov’t debt, what do the central banks hold as assets?

    (5) Are there any trends in monetary policy practices in Africa? Most importantly, I’m curious as to if disinflation or stable inflation is coming.

  1. Free Banking theorists should study Argentina’s experience with parallel currencies « The Market Monetarist
  2. Forget about East African Monetary Union – let the M-pesa do the job « The Market Monetarist
  3. The (mobile) market just solved Zimbabwe’s “coin problem” « The Market Monetarist

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