A single Asian currency may take years to develop, Japanese Finance Minister Sadakazu Tanigaki said.
ASEAN, China, Japan and South Korea said on Thursday they would study the creation of an index of the region's currencies that could be a precursor to a common exchange unit. The Asian Development Bank said in March that it was working on such an index, called the Asian Currency Unit (ACU).
The idea of a single currency for Asia and of integrating the region's economies came about after the financial crisis of 1997-1998 and has been backed by the Asian Development Bank (ADB) President Haruhiko Kuroda. A common Asian currency would make it easier for companies and governments to borrow at lower rates of interest, according to Standard & Poor's.
"Currency integration won't take place overnight as was seen in the experience in Europe," Tanigaki said at the annual meeting of the Asian Development Bank in Hyderabad, India.
"Although such a move is not in sight, not only economic cooperation but also political will will be required to see currency integration in Asia," he said.
Finance ministers of the group of 13 Asian nations on Thursday said that a Japanese research institute would study the steps needed to create "regional monetary units."
In a statement delivered to the ADB meeting, the governor of Taiwan's central bank applauded the bank for taking an important step to introduce the ACU, but expressed concern over the possible exclusion of the New Taiwan dollar from the eventual composition of the ACU.
"As a weighted index of a basket of Asian currencies, the ACU will serve as a benchmark to monitor movements in the values of currencies in the region," central bank governor Perng Fai-nan (
"The ACU's currency composition will be extremely important in representing the true economic configuration and financial structure of Asia. It seems to me that the current proposals for the ACU has left out some major currencies like the NT dollar," Perng said.
The NT dollar's inclusion was necessary, Perng said, given the size of Taiwan's GDP, its substantial trade and capital accounts, as well as the nation's improved financial development and market transparency.
But analysts said that the inclusion of the NT dollar, as well as the currencies of Hong Kong, Australia and New Zealand, in the ACU may face strong objection from China and the ASEAN economies.
A currency index "can be seen as an initial step toward an Asian currency unit, which would be the equivalent of the euro, but it's something that may be possible in a generation, say 25 years," Tim Condon, head of Asian markets research at ING Groep NV in Singapore, said in a telephone interview.
Developing a single currency will help borrowers to tap Asia's savings and "help to develop a vibrant Asian bond market as we have seen in Europe," Surinder Kathpalia, S&P's managing director said Friday in an interview in Hyderabad. "But that is still very long way off."
A common Asian currency isn't a precondition for the development of a pan-Asian bond market, Asian Development Bank Chief Economist Ifzal Ali told reporters on Friday. The European bond market was functional well before the euro became a common currency, he said.
ASEAN Secretary-General Ong Keng-yong said on Thursday that the development of a single currency isn't high on his group's agenda.