How Strong Is the Monetary Transmission Mechanism in the East African Community?

The leaders of the five partner states of the East African Community (EAC) decided in 2007 to fast track agreements on key protocols of the East African Monetary Union (EAMU) by 2012. A successful EAMU depends, among other things, on effective harmonization of existing monetary policies and operations across the EAC in transition to a future common monetary policy. The EAMU is expected to enhance the benefits of the EAC Customs Union and the EAC Common Market and deepen integration. It is also expected to reduce the costs and risks of conducting business transactions across national boundaries, as well as make way for a single currency, remove the costs of transactions in different currencies, and reduce the risk of adverse exchange rate movements in intraEAC trade