The European single currency was born of regional trade integration, but East Asia must follow the opposite route and first create a monetary zone to stimulate economic convergence, experts say.
Such notaries as Nobel prize economic laureate Robert Mundell and French economist Robert Boyer believe the 1997 Asian financial crisis highlights the need for regional monetary stabilization as a necessary step towards economic and commercial integration.
"Asia cannot aim at a single currency because that is an intensely political matter, but should look at a currency area," said Professor Mundell of New York's Columbia University who is considered one of the founding fathers of the euro for his work on optimal currency areas.
He argues Asia must stabilise its principal currencies against the greenback ahead of the eventual creation of a vast, independent, regional monetary zone.
According to Mundell, this would give major impetus to the creation of a regional free-trade zone, a project already under way in various forms.
But the zone needs some type of "anchor" as the US dollar is still the most significant currency in Asia. "A quick formula would consist of using the dollar as an `anchor' in the initial phase," Mundell says.
Mundell stresses that Hong Kong, China and Malaysia have already attached their currency to the greenback with a peg. He considers the floating and revaluation of the yuan "a very bad idea" and encourages Japan to stabilize its own currency at the rate of 120 yen to the dollar.
He suggests that the volatility of the yen is the origin of the loss of Japan's control of its monetary and budgetary policy, with the consequence today of prolonged stagnation of the Japanese economy.
The yen "would be a good anchor if not for its long history of chronic instability [with respect to the dollar], he says. "What would happen if the yen were the monetary anchor of Asia and saw its value triple?" the Nobel prize winner asks.
For professor Robert Boyer, "the 1997 Asian crisis made evident the strong dependence of theses [Asian] economies with respect to the dynamism of the United States and the stability of their local currencies in relation to the dollar."
"Instead of starting with the liberalization of trade, why not organize the stabilization of regional currencies through the progressive definition of common interventions on the monetary level and possibly coordinated budgetary policies?" Boyer asks.
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