By Joseph Allchin
The prospect of a single ASEAN currency was raised at a high level ministerial meeting in Hanoi this week in a move that would ask serious questions of the regional bloc, not least its less developed economies like Burma.
A briefing paper was prepared for the ASEAN+3 meeting of deputy finance ministers and was the first time that such an idea has been studied “concretely”, according to Dow Jones financial news.
Experts suggest however that this could spell “the end of the regime” in Burma. Australian-based Burma economics expert Sean Turnell told DVB that such a move would bar the Burmese government from funding itself through printing money as it pleases. That practice, he said, has led to the “biggest divergence” between an official and unofficial currency in history.
The briefing paper was prepared by Japan’s Institute for International Monetary Affairs, Singapore’s Nanyang Technological University, and the University of Indonesia, with an eye to “accelerate the integration process”, the Dow Jones report said.
“As economic integration deepens further in East Asia, it would be more beneficial to East Asian countries to adopt an exchange rate regime that collectively floats against the US dollar and the euro while maintaining a stable intra-regional exchange rate.”
This could initially be achieved through what is known as a currency basket, where an average value of a group of regional currencies is worked out and traded against international currencies such as the dollar or the euro.
Burma’s dual exchange rate and massive inflation rates would be a major stumbling block, but the prospect of a single currency could alternatively be a way out of the country’s persistent currency woes.
Turnell believes that ASEAN ignoring Burma’s self-financing through printing money is a “massive problem… which would undermine any sought of single currency”. If this was prohibited, as it is in the EU, for example, which has a single currency, then the Burmese regime’s “main financing vehicle would disappear in a single stroke”.
Europe’s experience moreover, where economies such as Greece, Ireland and Portugal collapsed under the weight of enormous government debt, has warned other blocs away from seeking a single currency. And while the divergence between Greece and Germany is great, the two systems are not as alien as Singapore’s to Burma’s, for instance.
While the prospect of an ASEAN single currency or regional monetary unit (RMU) is at present a distant possibility, moves such as the China-ASEAN free trade agreement have encouraged many to look at such mechanisms as most East Asian economies continue to perform well.