International | May 01 2006
With China leading the way the Asian region has enjoyed strong economic growth in recent years, but this has not erased the bitter memories of the Asian financial crisis of the late 1990s nor limited the attempts by countries in the region to ensure such an outcome never occurs again.
The Asian Development Bank (ADB) has a long-term plan to help ensure such instability is avoided in the future, proposing the eventual adoption of a single currency for the Asian region in a move similar to the introduction of the euro among European nations.
At this week’s meeting of the Association of South East Asian (ASEAN) nations plus Japan, China and South Korea, the bank is expected to present the latest development in its long-range plan, this being an index of Asian currencies dubbed the Asian Currency Unit.
The Unit would help the bank measure movements of Asian currencies again other major global currencies, while also allowing for greater analysis of how Asian currencies are performing against their regional counterparts.
The long-term plan of the bank to develop a single currency system in the region is based on the idea it would provide more support to the currencies of developing countries in the region. At present it supports the economies of these developing countries that are most at risk when external imbalances place their currencies under pressure.
Finance ministers from the ASEAN member countries and those of the regional big brothers Japan, China and South Korea, have already been working on methods to provide greater stability, in part by developing currency swap systems that make funds available to assist in supporting any currency that comes under pressure.
This week’s meeting is expected to be told the goals set last year towards this end have been achieved, but the work is far from done as with interest rates having moved higher in industrialised regions such as the US and Europe over the past twelve months there is now the concern less capital will flow into the Asian region.
As a result, the meetings are likely to see additional measures discussed if not introduced designed to help maintain sustainable economic growth levels in the region, whether or not the ADB’s goal of a single regional currency ever comes to fruition.
