One of the oldest established common monetary areas, South Africa, Namibia, Swaziland and Lesotho, where the rand is the main currency, could be a springboard for regional integration, South African Reserve Bank governor Tito Mboweni said on Thursday.

"We already, in the Southern African Development Community (SADC), have these countries in a common monetary area, a very successful monetary area in the world."

Mboweni was delivering the CR Swart Memorial Lecture at the University of the Free State in Bloemfontein on Thursday on the subject: Seeking greater political and economic regional integration in Southern Africa in challenging and turbulent financial times.

The governor said there was, nevertheless, one major fault with the monetary area.

Although the countries of Swaziland, Namibia and Lesotho allowed the South African rand to be used as a "legal tender" they did not participate in the formulation of its monetary policy.

"That is an undemocratic process that really and urgently needs to be changed." Mboweni said the governors of the central banks of the four countries had already developed comprehensive proposals to deal with the situation.

The proposal centred on the creation of a common Central Bank for the four countries.

"Which, if created, I am convinced would form a good basis for the establishment for an SADC-wide Central Bank. It could be used as a springboard for an SADC Central Bank."

For proper regional integration to take place, it was a "necessary, but not a sufficient condition" for the region's political leadership to want to integrate, Mboweni said.

The necessary macroeconomic requirements also had to be adhered to.

"This means and it must be stipulated amongst others, that the inflation level must be kept low and at a stable level of between 3% and 5%. We must do this because the inflation rate in the region has to have some relationship with our major trading partners."

Other requirements were the maintenance of prudent fiscal policies and to avoid large financial imbalances in the regional economy.

Mboweni said market certainty in the region had also to be maintained.

"This includes a whole range of issues as you know, such as private property rights and a legal system that everybody understands."

The outgoing Reserve Bank governor was of the opinion that the criteria already established for integration provided a clear direction for SADC countries to follow in order to eventually become an integrated unit.

The political dimension of the process also had to take root in Southern Africa for integration to be successful.

"We cannot have the situation where one or the other member of Southern Africa is ravaged by civil war and unrest and where there is no proper function of an economy."

Mboweni will leave the Reserve Bank in November after occupying the position of governor for over a decade.

He will be replaced by Gill Marcus, a former deputy Reserve Bank governor and former chairperson of the Absa Group.