ADB president Tadao Chino speaking at a seminar in Jeju, South Korea urged regional leaders to follow the global trend toward currency consolidation by moving toward the adoption of a single currency over the long run.
Chino said two factors are likely to encourage the adoption of common currencies – the increased number of countries in the world and the trend toward globalization.
"In an increasingly globalizing world, there is likely to be a greater synchronization of business cycles," he said. "Hence, the benefits of having fewer currencies to conduct cross-border business, especially at the regional level, are likely to increase."
Judging from the European experience, the groundwork would require considerable effort, if the region decides to go for a single currency.
But whether such a model would apply to East Asia has raised some concerns.
Robert F. de Ocampo, chief executive of the Asian Institute of Management (AIM) and former finance secretary, said that in the case of Asia, the concept of ‘region’ is premised on geographical reasons. The economic reality is that there is substantial diversity in the economies, each with its own idiosyncracies.
He said ADB’s key indicators show that the highest per capita income in Asia is about 140 times that of the lowest as of 2001, in contrast with Europe, where the countries are more on a par with each other.
"The key challenge facing the move towards greater cooperation and integration within the region is to find a way forward, that is, set priorities and sequence activities," he said. "The European experience does suggest that the adoption of a common currency is the last step in the process of regional economic integration, and hence takes a long time."
Meanwhile, ASEAN+3 finance ministers launched yesterday AsianBondsOnline, a one-stop clearinghouse of information on the rapidly growing sovereign and corporate bond markets in the region. The launch was held following the ASEAN+3 Finance Ministers Meeting, which took place in parallel with ADB’s 37th annual meeting in Jeju.
Supported by ADB and financed by the government of Japan, AsianBondsOnline is part of the ASEAN+3 Asian Bond Markets Initiative (ABMI), a cooperative effort to help develop mature bond markets in the region.
ASEAN+3 comprises the 10 members of the Association of Southeast Asian Nations – Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam – plus People’s Republic of China, Japan, and Republic of Korea.
The website provides a common format for accessing information on market infrastructure, rules and regulations, market activities, market data, and new policies and initiatives for each market as well as the region as a whole. It also provides news and commentary on regional bond markets, and recent economic releases, research, and analysis.
The site offers investors easy and centralized access to information about a segment of the global financial market that is growing in size and importance," Chino said.
The ABMI aims to enable private as well as public sectors to raise and invest long-term capital while effectively managing maturity and currency risks. Deep, liquid bond markets mitigate over-reliance on bank lending for corporate financing requirements, a situation that exacerbated the Asian financial crisis in 1997. They also help governments and businesses manage their own debt portfolios and reserves.