Currency Union

Doubt surrounding the viability of monetary unions stems from the current problems of the Eurozone. The absence of national monetary policies across the currency union has left a growing disparity in the effectiveness of the European Central Bank's policy in individual countries as well as a growing political rift between 'have' and 'have not' countries. Such problems make it less likely that regional trade groups will adopt such a model. This paper explores of the feasibility of cryptocurrencies, such as Bitcoin as an alternative to monetary unions and posits that electronic currency could be adopted by a regional group while still allowing individual members control over their national monetary policy. To answer this question, this research uses data from government forays into cryptocurrency as well as an analysis of Bitcoin and related government policies. The author concludes that a cryptocurrency could be used as a viable alternative to monetary unions.

In this paper we investigate to what extent tax incentives are effective in attracting investment in Sub-Saharan Africa. We test the neo-classical investment theory prediction that tax incentives, by lowering the user cost of capital, raise investment. Next to tax incentives, we also estimate the impact on investment of other investment climate variables that are under direct control of the government, such as the transparency and complexity of the tax system, and the legal protection of foreign investors. In developing countries these variables might be as important as or even more important than the tax variables themselves. Therefore, we analyze the policy changes in tax incentives and in the other investment climate variables for 12 CFA Franc Zone countries over the period 1994–2006. Because of their common currency (the CFA Franc) and common language (French) these countries constitute an exceptional basis of comparison to evaluate their ‘policy experiments’. The use of panel data econometrics with fixed country and year effects allows us to isolate the impact of the policy changes on investment, as if it were a difference in differences analysis with multiple policy changes. We find no robust positive relationship between tax holidays and investment in the CFA Franc zone. However, increasing the number of legal guarantees for foreign investors and reducing the complexity of the tax system helps to attract investment.

The World Basic Income Program can give all citizens in less fortune nations a modest, unconditional income, and let them top it up at will with income from other sources. We hope to work hand-in-hand with nations of the world to bring prosperity to all people. The World Basic Income Program is created by Mother Earth Trust through the issuance by the Earth Dollar Association of a complementary asset backed currency called the Earth Dollar. For our pilot project, a World Basic Income will be paid in cash (Earth Dollars), tax free, on a monthly basis to all people in selected regions in the world.

The new designs for the US Paper Money between 1914 and 1918: Federal Reserve Notes and Federal Reserve Bank Notes during the Word War I. Contents:
BEFORE THE FED, THE FED, THE NEW NOTES, 12 BANK SEALS, THE NEW TRADITION, 2 TREASURY SEALS, DATES, FIVE-DOLLAR BILL, TEN-DOLLAR BILL, TWENTY-DOLLAR BILL, FIFTY-DOLLAR BILL, ONE HUNDRED-DOLLAR BILL, ONE-DOLLAR BILL, TWO-DOLLAR BILL, $500 BILL, $1,000 BILL, $5,000 BILL, $10,000 BILL, 4 AUTHORIZATIONS ON THE “FED” PAPER MONEY (1914-1918), FINAL WORDS.

A growing number of papers have studied positive and normative implications of financial frictions in DSGE models. We contribute to this literature by studying the welfare-based monetary policy in a two-country model characterized by financial frictions, alongside a number of key features, like capital accumulation, non-traded goods and foreign-currency debt denomination. We compare the cooperative Ramsey monetary policy with standard

Long-run and short-run inflation expectations indicate the quality of anchoring and central bank credibility for its inflations target and expected pass-through of inflationary shocks. In this paper we provide a comprehensive literature review and find that changes and credibility of policy targets are passed through long-run and short-run expectations while shocks affect mainly short-run expectations and influence long-run expectations if they are sequential and not-accommodated. We exemplify our hypothesizes by empirical models and find that short-term expectations compared to the medium-term have a weaker link to long-term expectations.

The idea of creating a regional monetary zone for the Economic Community of West African States (ECOWAS) has been at the forefront of the regional integration agenda and has attracted interest from policymakers, researchers and other development stakeholders for the last three decades. The author, Diery Seck, Director of the Center for Research on Political Economy (CREPOL) in Dakar, Senegal, compares three competing options for the creation of the common monetary zone: The extension of the Union Economique et Monetaire Ouest Africaine (UEMOA) to other West African countries, a merger of the West African Monetary Zone (WAMZ) and UEMOA and the immediate creation of a new currency.

We quantitatively assess the macroeconomic implications of per- manently reducing the public debt-to-gross domestic product (GDP) ratio in euro area countries. The simulations of a currency union dy- namic general equilibrium model, calibrated to the euro area, give the following results. First, tax distortions are quantitatively signiflcant. Second, the best flscal consolidation strategy is to permanently reduce both expenditures and

Gross Domestic Product(GDP) is a widely used measurement of economic growth representing the market value of all final goods and services produced by a country within a given time. In this paper we question the assumption that GDP measures production, and suggest that in reality it merely captures changes in the rate of expansion of the money supply used to measure the price data it is derived from. We first review the Quantity Theory of Money $MV=PT$, and show that the Velocity of Circulation of Money(V) does not affect the price level as claimed, as it is also a factor of the quantity of transactions(T). It then follows directly that attempts to measure total production from any form of price data as the GDP measurement does, will necessarily be confounded by the inverse relationship between prices and the quantity of production, which requires that as the total quantity of production increases, prices will drop. Finally, in support of this claim we present an empirical analysis o...

We simulate the macroeconomic and welfare implications of different fiscal consolidation scenarios in Italy using a medium scale two-areas dynamic general equilibrium currency-union model. Differently from similar models, ours is rich in the terms of fiscal features. We assume distortionary taxes (on labor income, capital income and consumption) and welfare-enhancing public expenditure. We distinguish between public spending on final goods

Comércio regional e integração monetária são os elementos fundamentais no processo de integração regional no mundo. No entanto, os desafios são completamente diferentes: Embora os estados membros da União Europeia (UE) são económicamente e financeiramente unidos,lidam com os desequilíbrios atuais e potenciais riscos de contágio resultantes da crise na zona do Euro. A Comunidade Económica dos Estados Oeste Africano (CEDEAO), por outro lado,luta com baixos níveis de comércio intra-regional, dependências externas e com o objetivo de estabelecer uma moeda comum à escala regional.

Inspirados pelas experiências dos outros, a antologia IAO-ZEI combina as reflexões de investigadores bem conhecidos de ambas as regiões com referência as três das questões mais importantes a este respeito : Como podem os projetos de integração regional contribuir para o reforço do comércio regional e a integração na economia global? Quais são os efeitos da integração monetária e como as sinergias podem ser criadas? Até que ponto as experiências de outras regiões podem ser úteis nesse processo?

The euro crisis forces us to completely rethink European monetary policy. The European Central Bank’s policy of buying back sovereign debt does not address the real problem: it is only a way of propping up a system that has already failed. A structural response to the crisis would consist of giving states back the power to act, but in a way that would not destroy the monetary union. This paper suggest a way in which, while preserving the Eurozone, each state would put into circulation in its own territory a comple-mentary currency guaranteed by tax revenue and pegged to the euro, what we call a “fiscal currency”. This parallel currency would be a “popular” currency, issued as bills in small denominations and intended for day-to-day purchases. The euro would continue to be used for large transactions, transactions occurring at the European level, and for savings.
The kind of monetary federalism we propose would end the private banking system’s monopoly on currency issuance. Alongside a common currency regulated by European monetary authorities, it would create complementary national currencies subject to individual governments. At the same time, it would offer a response to the current crisis, though its scope is not limited to the problems afflicting the Eurozone’s “peripheral” countries.
More fundamentally, we affirm that a currency’s organizing principles must be consistent with a political community’s foundational values. In the case of the European Union, the goal is to transpose onto monetary policy the old maxim “unity in diversity” and to recognize monetary policy as a tool that must be available to a sovereign people to ensure its survival.
A decentralized fiscal currency—whether it be national, re-gional, or local, as it is perfectly possible to envisage several levels of issuance, providing they are backed up by anticipated fiscal revenue—is first of all a form of short-term credit that is cheaper than credit offered by financial mar-kets. But its goals could also be more ambitious: it can be designed as a full-fledged means of payments, a currency that permanently circulates through the local economy alongside the euro. To this end, it must be accepted by the population, and its implementation must be negotiated with the private sector. To do so, the government must actively build trust in the new currency and ensure its convertibility into euros.
The third goal of a fiscal currency is to force states to pursue more responsible fiscal and financial policies. When a supe-rior federal currency exists, a state issuing its own means of payment has every interest in maintaining its value: inflationary policies would reduce the value of its own future revenue and undermine its credibility and thus viability by increasing its dependence on federal authorities.
The need for internal convertibility and the defense of euro parity distinguishes our proposal from other ideas that have been recently advanced in the European debate, notably relating to the crisis in Greece, where a parallel currency would be devalued as soon as it was established.
Creating a parallel fiscal currency and defending its parity are challenging but feasible political actions, as several international political experiments indicate. Ultimately, it is an attempt to reform public governance in the midst of a crisis of confidence in the usual procedures of neoliberal “good governance.” Its success depends on the capacity of issuing authorities to win the trust of their populations: a fiscal currency issued by a state or local government must be seen as legitimate as the euro itself.

To what extent can the Euro be called a succes in economic terms? This paper investigates to what extent the Euro Area constitutes an Optimum Currency Area, ten years after its inception. It finds that the Euro Area is lacking in several important OCA indicators, and that the 'endogenous OCA theory' is only marginally influential at best. The paper also evaluates the predictive value of OCA analysis, and concludes that OCA criteria play a critical role in predicting the succes of a currency union.

... banks at the expense of taxpayers and sovereign bondholders will assist confidence in the ... Lane, Philip (2011): The Irish Crisis, Trinity College Dublin IIIS Discussion Paper 356, February. McCarthy, Colm (2009): Ireland's second round of cuts: a comparison with the last time, in ...

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper discusses costs, benefits, and implementation challenges of a possible currency union between Belarus and Russia. It shows that Belarus and Russia are economically closely linked but nevertheless do not fulfill all “optimal currency area ” criteria, especially the macroeconomic symmetry condition. Furthermore, we argue that the different speeds of economic liberalization over the past decade have resulted in different economic structures, with Belarus still dependent on monetary financing of budgets and industries. However, a final cost-benefit analysis also needs to consider that currency unification may bring substantial benefits from reduc...

According the theory of optimum currency areas, the sustainability of a currency union is mainly depending on macroeconomic criteria and policies. Political variables are mostly left aside. The author of this WAI-ZEI Paper, Professor of African Studies at the University of Bayreuth, Germany, and director of the Farafina Institute, challenges this view, taking the plans for a West African Monetary Union as an example. Kocra L. Assoua first sketches the efforts and different concepts of West African states to establish a single currency until 2020. In the second part he describes the security challenges and the vicious circle of political uncertainties the region is facing in parallel. The author concludes in arguing that the sustainability of a West African monetary union will not only depend on the credibility of macroeconomic policies, but als