EAC Political Union should come before single currency

Editor, I think a common currency among the East African Community (EAC) partner states would only be successful if we had a strong political union. EAC members need to rethink about adopting a single currency while we still have very different political institutions. For a currency to be called a currency, it has to be issued and monitored by a government through the central bank. When the government wills, due to some economic situations, it can decide to either print more currency or reduce money supply by issuing government bonds. This is an important aspect of today’s international monetary system. However, this process can only be done if there is an agreement inside the government. If EAC members start using a single currency without a political union, then it would be a serious issue when, for example, there is a need for new notes to be printed or when the currency needs devaluation or evaluation. Most economists have blamed the failure of the European Union’s Euro on the fact that Europe moved to using a single currency without a single government. I hope that EAC economists and monetary policy makers have critically looked into these issues so that the bloc does not find itself in the same mess Europe experienced over the last few years. Jean-Léon Iragena, United States Reaction to the story, “EAC Monetary Union signing due next week” (The New Times, November 20)

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EAC Political Union should come before single currency