Update: Key highlights of the Lumi Exchange Rate Mechanism (ERM)

Beneficiaries of the Eco-6 Lumi stimulus were excited to have heard the long expected news that came when almost all the hope was lost.

For the past one year, beneficiaries of the Lumi stimulus out of patient lamented over the inability to convert, withdraw or even trade with the Lumi currency.

In spite of the Programme being given at no cost many people threw abusive comments while some could not wait to verify the genuineness of it began to tag it with incriminating terms like “SCAM” and “DUPE”.

However, good things must always prove themselves to be good things even if the entire world should not believe they are real.

In this article we want to highlight keynotes of the Monetary Regulation of the ECO-6’s Exchange Rate Mechanism (ERM). The key things to note from the Regulation are;

“1. Transactability and integration between the national currencies of continental Africa (members states of the 5 Regional Economic Communities of the African Union) and the LUMI as legal tender of Sixth Region; all African currencies will be freely converted to LUMI.

2. Prohibition of export of “foreign currencies” such as US$, EURO, and Yuan from the Sixth Region to continental Africa. The Regulation requires that all “foreign currencies” be converted to LUMI for purposes of trade with the other regions of Africa.

3. For all African currencies and foreign currencies, the bilateral/multilateral rate vis-à-vis the LUMI will be quoted using the LUMI as the “base” currency. This means that for all currencies the exchange rate will be expressed as the value of LUMI 1 using eight significant digits.

All monetary agents will have until October 1, 2022, to have adapted to the new exchange rate mechanism.”

Based on the above issued instructions, it has become necessary for all financial institutions, states and governments to implement the Exchange Rate Mechanism (ERM).

The ECO-6 is referred to Africans outside of the Continental Africa, Other regions in Africa are hereby mandated to stop exchanges to dollar, pounds, euro or yuan but rather convert to Lumi first then from Lumi to any other foreign currency.

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