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April 26, 2013 11:29 pm
From Mr A.D.H. Leishman.
Sir, There is nothing futile about “a common currency without a common fiscal policy representing a sovereign political entity” (Alan Wendt, Letters, April 20).
For some five decades now, the Common Monetary Area in southern Africa has worked to the economic benefit and stability of the four countries signed up: the regional giant South Africa, with its economically dependent neighbours Lesotho, Namibia and Swaziland. (Botswana used to belong and has always kept its own successor currency trading close to a par with the rand.)
Each country has its own central bank and issues its own currency, with the South African Reserve Bank acting as the super-central bank. The rand is legal tender in all four countries on a one for one basis, though the other currencies, if used outside their national borders, trade at a slight discount to the rand and can only be tendered at banks.
While linked into the Southern African Customs Union with Botswana, the four countries are under no obligation to have a common fiscal policy (though sensibly tend towards it) and are entirely independent sovereign states.
A.D.H. Leishman, Barnard Castle, Durham, UK
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