Calls to revive regional bank
Museveni, who was speaking at the Bank of Uganda’s 40th anniversary just over a week ago, said revival of the regional bank was one way of speeding up plans for a federation with a single currency.
Bank of Uganda was established in August 1966 after the three East African governments, which were formerly under British rule, decided to set up national central banks.
This came in the wake of break-up of the East African Currency Board that was charged with governing the three countries’ monetary systems.
It had been set up by the colonial government in 1919 to issue currencies for the region.
“I hope the Bank of Uganda will not celebrate its 50th anniversary before the creation of the regional bank as this will be in contrast to our political mission of an East African federation,” said President Museveni.
From a pan-Africanist point of view, he said, the creation of separate central banks was a failure by the three countries to create a regional federation which would bring far more gains.
According to Bank of Uganda officials, a regional central bank, whose establishment will be based on the European Union model will boost trade in the three countries and strengthen the single currency in the international trade.
It will also be a building block to the establishment of the proposed African Central Bank, which will harness the already established regional groupings such as the Economic Community of West African States and Southern African Development Community to use a single currency and monetary policy.
Efforts are already underway to establish an African central bank ‘ a technical team meets twice a year under the cover of the African Union while all central bank governors meet annually to discuss the project.
But Bank of Uganda officials told The East African last week that the institution is working towards setting up an EAC Central Bank using the European Union model, where the monetary policy is determined by the European Central Bank.
“It is a historic decision and we intend to revive it by having a single central bank for the region. So far, a lot of work is being done in pursuit of this,” said Juma Walusimbi, Bank of Uganda’s spokesman.
He said using the European model, the national central banks will remain operational but a single monetary policy determined by the EAC Central Bank, where the national banks will implement the monetary policy will be pursued.
Efforts to promote the East African monetary and financial co-operation under the EAC Treaty are already underway.
The three states co-operate in maintaining the convertibility of their currencies as a basis for the establishment of a monetary union.
They have also committed themselves to harmonising their macroeconomic policies, especially in exchange and interest rate policies, and allowing free movement of goods within the region.
The partner states have also undertaken in strengthening banking and capital market development through the harmonisation of regulatory and legislative framework policies as well as promotion of regional stock exchanges and capital markets.
During the Bank of Uganda celebrations the president commended Bank of Uganda for maintaining a stable growth rate of 6 percent per annum over the past six years.
He, however, noted that the bank had failed to control the commercial bank lending rates which are at 19 percent. ‘ The East African.