Institutional Framework of West African Monetary Integration

Economic Community of West African States is in an advanced stage of establishing a single Eco currency with several setbacks in the launch of the currency. Most studies on Eco currency have analysed the feasibility of Eco based on economic considerations. While economic factors are pertinent to the creation of a single currency, this paper illustrates that effective political, legal, social, and cultural institutions are equally as important in the success of a monetary union. Within this framework, the aim of this paper is to examine the impact of core west African monetary institutions and their influence in the negotiation and formation of the monetary union. The analysis demonstrates that large economies like Nigeria argued by scholars to pose a disproportionate risk to the monetary union can be contained through an adequate risk sharing mechanism. Heterogeneity in the region should be regarded as an opportunity for specialisation in areas of comparative advantage and not as a hinderance to a monetary union. The paper argues that discord and divergence of the region can be addressed through precommitment rules and a proportionate representation system. The paper advances the political debate, institutional relevance, and social legitimacy of the Eco single currency