May 07 2006
Evolving Asian Monetary Fund Proposal
Read the article on NYT: Asian Finance Ministers Seek Common Currency
Summary:
Finance ministers from China, Japan and South Korea announced tentative steps on Thursday to coordinate their currencies in ways that could ultimately produce a common regional currency like the euro (by “immediately launch discussions on the road map for the system to coordinate foreign exchange policy,”)
(Given how tenuous the political relations the three countries have, this move is both surprising and unconvincing)
They also pledged to enhance an existing framework to defend regional currencies against speculators and work toward the development of Asian bond markets.
The Asian Development Bank has been pushing the idea of an Asian currency unit, or A.C.U., over the past year … The Asian currency unit initiative is now backed by the so-called Asean Plus 3 grouping.
(economists do the driving, politician steering)
But senior finance officials from Japan and Germany appeared to echo the Chinese view that structural reform, rather than quick-fix currency changes.
(The Japanese should know better, of course)
Thoughts:
Can one have a unified currency without a unifying organization–central bank? There is no talk in the article about this at all, or CB by committee? CB will not function as long as it is still politically linked.