THE Association of Southeast Asian Nations (Asean) is not yet primed for a single-currency union in the near future due to the “discrepancies and divergence” of its member-countries, AseanEconomic thought leaders said on Thursday.
At the Second Asian Business Conference held in Makati City, economic leaders said Asean is not headed toward a monetary union, which they said is considered a “slippery slope” by its members.
“It is probably impossible to achieve monetary union now for Asean because of lack of political unity, of divergence and many other factors,” Oxford Business Group Regional Editor for Asia Paulius Kuncinas said in one of the plenary discussions at the conference.
ING Bank Head of Clients and Corporate Finance in Asia Manuel Salak III, who was also a panel discussant, said that unless there is a “regional coordinatory agency” that supervises and coordinates monetary and fiscal policies within the region, a monetary union for the Asean “is going to be problematic.”
“We have already emphasized that fiscal policy and fiscal measures cannot be divorced from monetary policies. So at the end of the day you know the problem is, while some monetary measures are controlled by central bank regulators, fiscal measures are legislative in nature. They have to be passed by congressmen and the Senate.
We are not in a position in Asean to do that today,” Salak noted on the potential “disconnect” between fiscal and monetary issues if a single-currency economy is implemented in the region.
In a separate panel at the same conference, Asian Development Bank (ADB) Head of the Office of Regional Economic Integration Iwan Azis also said the process of integration in the region is more “market-driven” rather than heavy with regulations such as the European Union, where they have a single-currency economy.
Kuncinas proceeded to say that the region must instead focus on financial exchange-rate stability and continue to avoid competitive currency devaluation, as the region has done the past year.
“I can say it is one of the achievements that the central banks of Asean has been coordinated their moves. So again as an idealist, I would say monetary union is an ideal vision, I do believe in single-currency unions. I don’t think it is impossible.
For now, the region should try to be sure central bank moves are coordinated for currency stability,” Kuncinas said.
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