Toward Maghreb monetary unification: what does the theory and history tell us?

Since the beginning of the decade, numerous economic and monetary unification projects have aroused a lot of interest. The reinforcement of economic and monetary integration, especially in Europe, has set a trend for the creation of a monetary union in many others regions of the world. Since then, the debate has moved towards the study of the parameters that justify the creation of a single currency. However, another current of thought emphasized the fragility of the traditional theory and considered the criteria as incomplete, since this theory insists solely on a few elements concerning the adjustment process under various exchange regimes (Bogdan 2004). Also, many monetary unions have existed and lasted without meeting this theory’s criteria. Other economists recommend studying the history of these monetary unions so as to define the necessary conditions for the success of a monetary integration (Sharp 2005, Jonung 2002). Within Maghreb, the completion of the regional integration process, initiated in 1989 by the creation of the Arab Maghreb Union (AMU) and the establishment of the Maghreb monetary union would have a positive impact on economic growth, good governance and political stability. In this paper, we showed that the Maghreb Countries can not constitute a monetary block that satisfies the criteria of optimality. Moreover, the study of historical experiences also allowed us to verify that the MCs have to strengthen their political coordination and improve their budgetary and financial situations to establish a lasting monetary union. Finally, with the aim of a Maghreb monetary unification, we conclude with the idea that these countries have to make more efforts to gather economico-institutional conditions essential to the institution of one of the two preliminary proposed monetary systems, namely a pure float with inflation targeting or a currency board.