Drawing on the recent literature and experience on monetary integration in Europe, the paper examines the rationale for establishing regional currency unions in Western Africa. Despite dramatic economic, political and historical differences between the two regions, the analysis indicates that...

We develop a model in which governments' financing needs exceed the socially optimal level because public resources are diverted to serve the narrow interests of the group in power. From a social welfare perspective, this results in undue pressure on the central bank to extract seigniorage....