Cape Verde: The Case for Euroisation

Abstract

After a decade of a successful peg to the euro, the authorities of Cape Verde are considering the official euroisation of the country. For an "ex ante" economic evaluation of such a move, this paper assesses whether Cape Verde fulfills key economic criteria devised by the optimum currency areas literature, using as benchmark the comparable records of the 27 European Union (EU) countries. The answer is positive. Overall, we find that Cape Verde is not less suited for euroisation than some of the current euro area members and most of the remaining members of the EU. Copyright (c) 2010 The Authors. Journal compilation (c) 2010 Economic Society of South Africa.