Regional Currency Areas in Financial Globalization
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Regional Currency Areas in Financial Globalization

Edited by Patrick Artus, André Cartapanis and Florence Legros

This book is an up-to-date, authoritative and comprehensive analysis of the key issues and challenges facing regional currency area projects in the context of financial globalization. The authors focus on several central issues that emerged during the experiences of the 1990s and 2000s: exchange rate regimes and optimal currency area theory; exchange rate regimes in emerging countries, international capital markets and regional currency areas; EMU and the euro; exchange rate regimes in Central and Eastern Europe, Asia and Latin America; dollarization and the coordination of macroeconomic policies in the presence of regional currency areas.
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Chapter 9: Is a Monetary Union in CARICOM Desirable?

Olivier Manioc and Jean-Gabriel Montauban


Olivier Manioc and Jean-Gabriel Montauban INTRODUCTION At present, four monetary unions are active in the world. Apart from the European experience, they concern developing countries in Africa, where two monetary unions operate, and in the Caribbean region. These monetary initiatives were not the result of ambitious political steps, as in Europe, but arose from a will to limit the cost of independence, to take advantage of monetary assistance from former colonial powers, and to ensure the economic viability of these new countries. These arrangements have indirectly contributed to perpetuate the monetary community created by the former colonial powers. The unions did not permit those countries to get over the economic rivalries, sometimes numerous, and did not promote the market integration of their member countries; the common currency is only a veil masking the difficulties developing countries have to undergo. Their strong external dependence and the weak relations established between these economies are often considered as major hindrances. They have given rise to doubts concerning the efficiency of such monetary arrangements between developing countries. Despite all these uncertainties, the idea of forming a monetary union in CARICOM has been suggested.1 As soon as CARICOM was created, the member countries acknowledged that monetary stability was essential for the good working of the common market.2 This necessity gave birth to the establishment of a compensation procedure aimed at favouring the use of currencies of member countries. Unfortunately this attempt failed. Nevertheless the different heads of governments, conscious that the development...

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