The challenges of monetary union: risks and pitfalls and how to respond to them

Abstract

The purpose of this paper is to x-ray the challenges of monetary union with a focus on the risks and pitfalls and how to respond to them, paying particular attention to their relevance to the proposed second monetary union in West Africa. To accomplish this task, the rest of the paper has been divided into four sections. In section II define a monetary union and briefly review its main features/characteristics and the rationale for forming a monetary union. It also examine the benefi ts and costs of monetary union, as has been espoused in the vast literature on economic and monetary integration in the world economy in section Ill.