Real and Monetary Policy Convergence: EMU Crisis to the CFA Zone

Journal of Financial Economic Policy, 5(1), pp. 20-38 (2013).

25 Pages Posted: 9 Sep 2014 Last revised: 1 Apr 2015

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Date Written: January 8, 2012


Purpose – A major lesson of the EMU crisis is that serious disequilibria result from regional monetary arrangements not designed to be robust to a variety of shocks. The purpose of this paper is to assess these disequilibria within the CEMAC, UEMOA and CFA zones.

Design/methodology/approach – In the assessments, monetary policy targets inflation and financial dynamics of depth, efficiency, activity and size while real sector policy targets economic performance in terms of GDP growth. We also provide the speed of convergence and time required to achieve a 100% convergence.

Findings – But for financial intermediary size within the CFA zone, findings for the most part support only unconditional convergence. There is no form of convergence within the CEMAC zone.

Practical implications – The broad insignificance of conditional convergence results have substantial policy implications. Monetary and real policies which are often homogenous for member states are thwarted by heterogeneous structural and institutional characteristics which give rise to different levels and patterns of financial intermediary development. Therefore member states should work towards harmonizing cross-country differences in structural and institutional characteristics that hamper the effectiveness of monetary policies.

Originality/value – The paper provides warning signs to the CFA zone in the heat of the Euro zone crises.

Keywords: CFA Zone; Currency Area; Convergence; Policy Coordination

JEL Classification: F15; F36; F42; O55; P52

Suggested Citation

Asongu, Simplice, Real and Monetary Policy Convergence: EMU Crisis to the CFA Zone (January 8, 2012). Journal of Financial Economic Policy, 5(1), pp. 20-38 (2013). . Available at SSRN: or

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413

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