Asia can start discussions on a shared currency to avoid “intra-regional exchange rate complications,” Asian Development Bank (ADB) president Haruhiko Kuroda said yesterday.
“I hold the view that we can start discussions and seriously discuss this issue,” he said at a public lecture in Singapore. “Although it may take decades, eventually I think we may be able to establish a common currency.”
Asian governments have been debating the merits of a shared currency since the region’s economies were rocked by a financial crisis a decade ago. Ten-country ASEAN is proceeding with efforts to create an economic zone modeled after the EU, without a common currency, by 2015.
“Creating a common currency does involve overcoming hurdles,” Kuroda said.
These include the need to have a common market, some harmonization of macroeconomic policies, a regional central bank that would require regional countries give up their currencies and independent monetary policies, he said.
Kuroda said he was “quite confident” that talks on expanding the so-called Chiang Mai Initiative will be completed by the end of this year.
Countries outside ASEAN and the three northern neighbors may participate in the initiative in the future, he said.
Asian countries must increase communication on their foreign exchange policies as currency volatility can affect regional financial systems, Kuroda said, without elaborating.
Establishing a mechanism to monitor regional currency movements would benefit the region, he added.
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