Asia's one currency bid an "impossible dream"

CEBU, Philippines - With the unfavorable events concerning the Eurozone, the bid of having a common currency in Asia is seen to be next to “impossible dream,” an economist said.

While the some countries in Asia, are not yet achieving its maturity in terms of monetary system, thus holding off the bid of pursuing a common currency in the region, economist Bernardo Villegas said that what is happening in Europe right now is a good example why Asia cannot implement this plan at least in the next 50 years.

Although it is beneficial for the entire Asian region to have one currency, the works will still take a long time, as there are still concerns to be ironed out, before this ambitious bid can be implemented.

In an earlier interview with Bangko Sentral Ng Pilipinas (BSP) Governor Amado M. Tetangco Jr., he said the Philippines is actively participating in the ongoing negotiation to have one currency in Asia, but because of some immaturities of financial environments in some countries, it may take decades even as long as 50 years to make it happen.

Tetangco said if this happens, the exchange rate risks will be eradicated and could pave the way for good exporting business, and boost trading between Asian countries, as well as trading in other continents.

The BSP governor said it even took 50 years for the European Union (EU) to implement the one currency concept. Asia on the other hand should push unity and standardization and harmonization of financial rules, in stock market, equities, among others.

On the other hand, he said the priorities of the Asian region according the blueprint that is expected to happen by 2015 is the liberalization of capital development, capital market, and financial security.

Once these three main concerns will be settled, the Asian region can proceed to the works and the implementation of one currency, he said.

One of the problems also is the hosting of one Central Bank for Asia, it could push a debate between giant economies in the region, whether China or Japan, Tetangco said.

He said this development can be anticipated, but not in the short term yet. Although, if the unity of the Asian financial markets will be fast tracked there is good potential that it could happen in less than 50 years.

Flow of goods, without having to worry for currency and exchange rate risks is one of the great benefits that each country can benefit if one currency concept, just like the European Union countries are doing, he said.

The Philippine central bank has been lauded as one of the brilliant central banks in the region, with its capability to cushion the financial stability in the country, amid the global economic crisis.

Tetangco said that in the short term, with or without single currency concept, Asia will be able to strengthen its economic power, by implementing first the three main priorities in the development of financial markets in each member countries.

First, Tetangco said Asia should develop a strong asset community that is “truly” Asian, and that can promote a single economic community.

This time, though there are still countries in Asia, of which financial markets are still not mature, and the stronger ones, should help in the development of financial markets those countries. — (FREEMAN)