A Makerere University professor, Eriya Hisali says the proposed East African Monetary Union would have more benefits than costs for the ordinary Ugandan.
Hisali, an economics lecturer and an expert on regional integration, says a single currency in the region will help control inflation since all countries would be under a single monetary policy with specific inflation controls. In turn this would lower prices for goods and services.
Hisali analysis comes days after central bank governors from the East African Community instituted a study into fast tracking of the East African Monetary Union by 2012. This measure would see the initializing of the Monetary Union take place three years earlier than expected.
During a meeting in Kampala last week, Emmanuel Mutebile, Governor of the Bank of Uganda said the study would give an independent assessment of progress towards harmonization of monetary policies of member states.
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Mutebile said the study would also try to harmonize the objectives of a Customs Union and a Common market to that of a sustainable Monetary Union.
Dr. Eriya Hisali is of the view that a single regional currency would boost trade by eliminating foreign exchange transactions that have high commissions and taxes. He adds that a single currency boosts business both locally and regionally by helping avoid currency devaluations leading to reduced transaction costs and consequently lower prices for the end consumer.
According to the university don a common currency also has the potential of creating uniform prices for goods and services and where there are differences as a result of, for example, transport costs the price differential is often negligible. He, however, notes a monetary union comes at a cost involving issues like loss of a country's independence in monetary policies and loss of exchange rate flexibility.
Despite the costs, Hisali says for a country like Uganda the benefits of a monetary union far exceed the costs.