Does asia need a single currency

common currency in southeast asia

Before I proceed to explain what the ASEAN finance and central bank officials have been doing, let us review first what the objectives of adopting a common regional currency are. The AEC is the end-goal of economic integration as outlined in the ASEAN Vision and the Bali Concord II to establish a single market and production base, characterized by the free movement of goods, services, investment, and a freer flow of capital.

Should south asia have common currency

The reason why multilateralization of the Chiang Mai Initiatives took quite a long time to arrange is that immediately following the Asian financial crisis threats of instability receded, and thus there was little urgency to getting any agreement done. This requires regional cooperation, promotes institutional and person-to-person collaboration and networking, and establishes standards and policies that are foundational to the members. The overall goal of a single currency is to contribute to the financial stability of a regional economy, including price stability. For the time being, however, this adoption remains unrealistic. The ASP serves as an early warning mechanism. The third stage — and completion — of EMU meant not only the launch of the euro, but also that the disciplines of the Stability and Growth Pact took effect for all Member States. The AEC will also facilitate the movement of businessmen, skilled labor, and talents within the region.

I will explain this in a little while. Take Singapore with its highly developed service sector and extremely high per capita income, and compare it with Indonesia, a sprawling archipelago where most of the population still resides in the countryside.

possibility of common currency in asia

Fifth, the official attitude towards more controls over the speculative barbarians at the gate has changed, even as Germany unilaterally banned naked short selling and the IMF has acknowledged that capital controls are part of the macro-economic toolkits.

Governments could no longer turn to central banks for funds to help balance their books.

South asia should have common currency like europe gd topic

From the start of the second stage, rules on pursuing broadly similar economic policies among the EU members applied. The Roadmap for the Integration of ASEAN in Finance is the latest regional initiative, which aims to strengthen regional self -help and support mechanisms. At least, European bureaucracies have been talking and bargaining with each other for more than 50 years through the centers' of power in Brussels, Basel and Frankfurt. The European Commission was given responsibility for monitoring Member State compliance. The objectives of a single currency 4. Therefore, ASEAN economies are more concerned about currency stability against major international currencies, like the US dollar, than among themselves. The ASP serves as an early warning mechanism. They must maintain budgets which are close to balance or in surplus. Common thinking is non-existent, let alone common institutions. The AEC is the end-goal of economic integration as outlined in the ASEAN Vision and the Bali Concord II to establish a single market and production base, characterized by the free movement of goods, services, investment, and a freer flow of capital. The reason why multilateralization of the Chiang Mai Initiatives took quite a long time to arrange is that immediately following the Asian financial crisis threats of instability receded, and thus there was little urgency to getting any agreement done. Indeed, there is no sign that there is greater sense of regional cooperation, since Korea was also willing to put currency issues on the agenda of G in Toronto. Those who think that Asian integration is a pipe dream say that there is currently no political consensus, not even the makings of a unified monetary or currency policy, and little convergence on supervisory policy. Proponents of Asian monetary integration point to growth in trade integration as a pre-condition for future financial integration. Other important criteria are macroeconomic stability and a similar level of economic development.

Currency cooperation would involve exploration of possible currency arrangements, including an ASEAN currency payment system for trade in local goods in order to reduce the demand for US dollars and help promote stability of regional currencies, such as by settling intra-ASEAN trade using regional currencies.

Despite the benefits, there are major hurdles to overcome before the single currency can be achieved.

a common currency for asia. is it possible gd topic

For all its strides in recent decades, ASEAN is still many years away from achieving the degree of homogenisation needed for the successful implementation of a single currency. The balance of power between markets and the central banks in managing currency stability has tilted back towards central banks.

South asia should have a common currency like europe

The peer review, the second element of the ASP, provides the forum at which ASEAN finance ministers exchange views and information on developments in their domestic economies—including policy measures carried out and the progress of structural reforms. Sharing a single currency requires the countries to follow very similar business cycles. The European Union decided to form a monetary union in the early s, which came into being on 1 January Capital market development entails promoting institutional capacity, including the legal and regulatory framework, as well as the facilitation of greater cross-border collaboration, linkages and harmonization between capital markets in the region. For example, unlike the European Union, ASEAN is a much more diverse group, comprising individual economies of vastly different sizes and levels of development. Indeed, there is no sign that there is greater sense of regional cooperation, since Korea was also willing to put currency issues on the agenda of G in Toronto. Share to twitter Share to linkedin At the 10th anniversary of the euro's launch in , there were some suggestions that one-day the euro might even take over the role of the U. The AEC is the end-goal of economic integration as outlined in the ASEAN Vision and the Bali Concord II to establish a single market and production base, characterized by the free movement of goods, services, investment, and a freer flow of capital. The euro problems are more warning signals to Asian reforms on what not to do and what to avoid, rather than positive indicators of the road to integration. If this process accelerates and spreads, Asian financial integration will happen through the ramen bowl of inter-connected institutions. Fifth, the official attitude towards more controls over the speculative barbarians at the gate has changed, even as Germany unilaterally banned naked short selling and the IMF has acknowledged that capital controls are part of the macro-economic toolkits. For countries which are members of a monetary union, a single currency means lower cost or risk of cross-border business through the elimination of currency risk. Conditions for a single currency 7.
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Does Asia Need a Common Currency?