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International Monetary Fund
This Selected Issues paper on the Kingdom of Lesotho reviews the broad objectives and key institutional features of the Common Monetary Area (CMA) relating to currency arrangements. The CMA Agreement provides for the three small member countries to have access to South African capital and money markets, but only through prescribed investments or approved securities that can be held by financial institutions in South Africa. Lesotho’s exchange rate arrangement under the CMA shares certain characteristics of a currency board.
Ms. Iyabo Masha, Mr. Leighton S Harris, Mr. Jian-Ye Wang, and Ms. Kazuko Shirono
This study assesses the experience of the Common Monetary Area (CMA) based on available empirical evidence over the last two decades. It pays particular attention to member countries' adjustment to economic shocks in recent years and the inter-country linkages, including the spillover effects of policies. The paper draws the main lessons from the CMA experience, identifies key policy challenges, and discusses the issues facing the member countries in their efforts to achieve sustained growth. Implications for further economic integration in a broader regional context are also noted.
Ms. Iyabo Masha, Mr. Leighton S Harris, Mr. Jian-Ye Wang, and Ms. Kazuko Shirono

. 4 6. The RMA agreement was revised in April 1986 to establish the Common Monetary Area of Lesotho, Swaziland, and South Africa. Under the terms of the CMA Agreement, Lesotho and Swaziland would also have the right to issue their own national currencies. Swaziland issued its national currency, the lilangeni, in 1974, followed by Lesotho introducing the loti in 1980. Namibia, which became independent in 1990, joined the CMA in 1992 and issued its own national currency, the Namibian dollar, in the following year. The national currencies of Lesotho, Namibia and

Mr. Tamon Asonuma, Mr. Xavier Debrun, and Mr. Paul R Masson
This paper proposes a quantitative assessment of the welfare effects arising from the Common Monetary Area (CMA) and an array of broader grouping among Southern African Development Community (SADC) countries. Model simulations suggest that (i) participating in the CMA benefits all members; (ii) joining the CMA individually is beneficial for all SADC members except Angola, Mauritius and Tanzania; (iii) creating a symmetric CMA-wide monetary union with a regional central bank carries some costs in terms of foregone anti-inflationary credibility; and (iv) SADC-wide symmetric monetary union continues to be beneficial for all except Mauritius, although the gains for existing CMA members are likely to be limited.
Mr. Tamon Asonuma, Mr. Xavier Debrun, and Mr. Paul R Masson

institutionalized on December 5, 1974, with the signing of the Rand Monetary Area (RMA) agreement. Botswana left the RMA in 1975 in favor of policy independence. 8 The RMA was revamped in April 1986 and transformed into the CMA, composed of Lesotho, Swaziland, and South Africa. Under the terms of the CMA Agreement, Lesotho and Swaziland would continue to have the right to issue their own national currencies. Swaziland introduced its currency, the lilangeni, in 1974, followed by Lesotho’s loti in 1980. Namibia, which gained independence from South Africa in 1990, formally joined

International Monetary Fund

union was formally established on December 5, 1974, with the signing of the Rand Monetary Area (RMA) agreement. The RMA was revised in April 1986 to establish the Common Monetary Area (CMA) of Lesotho, Swaziland, and South Africa. Under the terms of the CMA Agreement, the South African rand would continue to be legal tender in Lesotho and Swaziland, which would also have the right to issue their own national currencies. 2 When these countries issued their own currencies, they became responsible—albeit to a very limited extent—for their own monetary policy and assumed

International Monetary Fund
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
International Monetary Fund

would depend on proper implementation and could be enhanced by policies that provide alternative means to adjust to economic shocks, such as fiscal transfers, labor mobility, and increased wage and price flexibility. 92. The following sections provide an overview of the CMA, its benefits and costs, and examine what steps would be needed to implement a monetary union . Section B gives a short history of the CMA and provides the details of the CMA agreement and a separate monetary agreement between Namibia and South Africa. Section C analyses how the CMA differs from