ASEAN – Southeast Asia

Should a single ASEAN currency be created?

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This topic contains 2 replies, has 3 voices, and was last updated by Profile photo of Betty Cheng Betty Cheng 3 months, 3 weeks ago.

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  • #7400
    Profile photo of ASEAN UP
    ASEAN UP
    Keymaster

    Based upon the model of the EURO, should a single currency be created for the whole Southeast Asian region?

    Why or why not? What would be the benefits or the issues?

    Should only certain countries be included?

    #8092
    Profile photo of Florian Bansac
    Florian Bansac
    Participant

    That is a tricky question considering the current issues of the model for an ASEAN currency, the Euro.

    The main benefit of the Euro is that it prevents competitive devaluations from member countries, limiting artificial perturbations of the single European market. Trade is therefore greatly enabled between the Eurozone countries as money can move freely, and the currency is “transparent”: no change fees, no transfer fees, no monetary distorsions.

    The main disadvantage is for countries with “weaker” economies (such as Greece) that have to cope with a strong currency (pulled up by the strong economies like Germany) and therefore cannot price down their productions. They cannot boost their competitiveness through currency devaluation.

    It is therefore unlikely that a single ASEAN currency would be implemented before the disadvantages for the weaker economies outweigh the trade benefits of a single market with a single currency.

    #8108
    Profile photo of Betty Cheng
    Betty Cheng
    Participant

    It seems that many ASEAN countries are not ready to give their monetary sovereignty for a trade benefit.

    So, it’s not likely that a single ASEAN currency will be implemented any time soon, especially if the European model is not working well.

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