Plans of Asia-Pacific Integration through Single Currency

Asian leaders have once again brought up the idea of common currency at the 4th East Asia Summit (EAS) which opened on Sunday, where ASEAN members along with others including China, Japan, South Korea, India, Australia, and New Zealand met to discuss about regional cooperation particularly on trade and climate. Even while it was conceived three years ago, India had opined it could not be achieved overnight yet would be a reality when co-operation among Asian nations gets much more plausible.

However, the Australian premier Kevin Rudd’s call for a broader Asia-Pacific region that includes the US was a dampener to the proposal of single currency as the US cannot approve another party spoiler to its currency besides the euro. The US always maintained and expressed that it desired to be part of the bloc which would become the largest group above the EU especially since the Asian economies are tipped as economic recovery agents by the WTO and other financial institutions.

A new EU-styled common currency community which likely to include Australia and New Zealand is an ambitious project though the bloc face far more problems than the EU in respect to border issues among members, political instability, human rights violations and so on. The ASEAN bloc is already committed in establishing a single market and manufacturing base by 2015, but Japan and China are keen to increase the size of the market to include the EAS countries including Australia and New Zealand.

Japan's new Prime Minister, Yukio Hatoyama, has reportedly initiated the call for the single currency, which experts felt would change the global balance of power, if it ever happened. Hatoyama’s proposal immediately received support from China, which said it was ready for discussions.

On the contrary, the New Zealand Prime Minister John Key deflected the idea by saying currency union was normally the last step for any community of countries, and a lot of progress had to be made on regulation and trade barriers before moving on to currency union. However, he admitted there was no question about a growing appetite for a broader consensus on this issue, and his country was committed on the progress of a pan-Asia free-trade area.

Kavi Chongkittavorn, former assistant to the ASEAN secretary-general, said the group was divided along "ideological and generational lines" that had left it polarized on issues like human rights, political intervention and territorial disputes. The Thai Prime Minister Abhisit Vejjajiva, the host and current chair of the ASEAN presidency, urged ASEAN countries to get closer to become more influential in the international community.

The resurfacing of the need for a common trading unit indicates that the countries have realized the need to initiate a feasibility study on this matter. Three years later, thus the summit clears the air on working on a plan to evolve a common currency unit.

By Jose Roy