History of the common monetary area

The common monetary area (CMA) of the rand in southern Africa has its roots in an informal monetary union that made the South African pound the only legal tender in SA, the former Bechuanaland (now Botswana), Lesotho, Namibia and Swaziland after the establishment of the SA Reserve Bank in 1921.

This continued after Botswana, Lesotho and Swaziland gained political independence in the 1960s, with the South African rand replacing the pound in 1961.

In 1974 SA, Botswana, Lesotho and Swaziland signed the Rand Monetary Area Treaty, but Botswana withdrew from it in 1975.

Both Swaziland and Lesotho established their own monetary authorities and introduced their own national currencies, pegged at par to the rand.

In 1986 SA, Lesotho and Swaziland signed the CMA Trilateral Agreement to replace the RMA. Swaziland discontinued the use of rands as legal tender until 2003, but kept the peg of its lilangeni to the rand.

After Namibia became independent from SA in 1990 it joined the CMA in 1992 and issued its own Namibian dollar in 1993, which is also pegged one-to-one to the rand.

With SA accounting for more than 90% of the CMA's GDP, trade and population, the rand is still the only de facto common currency in the CMA.

Among differences between the rand CMA and the eurozone is the lack of a common central bank and common reserves.

The CMA eases trade between the countries and the rand peg helps to ensure price stability. - Additional source: IMF