Cobham, David, and Peter Robson, 1994, “Monetary Integration in Africa: A Deliberately European Perspective,” World Development, Vol. 22 (March), pp. 285 –99.
Collings, Francis d’A., and others, 1978, “The Rand and the Monetary Systems of Botswana, Lesotho, and Swaziland,” The Journal of Modern African Studies, Vol.16 (March), pp. 97 –121.
Foulo, Tabo, 2003, “Regional Currency Area and the Use of Foreign Currencies: Lesotho’s Experience,” Bank for International Settlements Papers, No. 17, pp. 128 –33, (Basel: BIS); http://www.bis.org/publ/bispap17.htm
Humpage, Owen F and Jean M. McIntire, 1995, “An Introduction to Currency Board,” Federal reserve Bank of Cleveland Economic Review (31), p. 2 –11.
The SACU was established in 1910, with membership comprising South Africa, Botswana, Namibia, Lesotho, and Swaziland. In 1921, after the establishment of the South African Reserve Bank, the South African pound became the sole medium of exchange and legal tender in South Africa, Bechuanaland (now Botswana), Lesotho, Namibia, and Swaziland.
Botswana, however, withdrew from the RMA in 1975, mainly because it was not willing to surrender its ability to formulate and implement monetary policy and wished to have the option of adjusting the exchange rate, if necessary, in response to shocks affecting its economy (see Collings, et al (1978) and Guma (1985)).
The aggregate amount of Maloti currency issued is measured at any given time by the average of such currency in circulation during the immediately preceding 14 days.
To some extent, such flows are facilitated by the fact that Lesotho’s banking system comprises four banks, three of which are South African. At the same time, however, foreign direct investment (stock) from South Africa is sizable, equivalent to about one-fifth of Lesotho’s GDP.
See Humpage and McIntire.
See Chapter II, “Competitiveness and Export Performance in Lesotho,” for more details.