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Part - VII
Conclusions and the Way Forward
The Asian region is still some way from meeting these criterions. A lot of concerted effort and planning will need to go in before we can realistically think of a common Asian currency. The first step for achieving the same could be having sub-regional common currency areas. We can have the ASEAN common currency and the SAARC region common currency. Success of this common currency can create the much desirable pull for a common Asian currency. Also, lessons from these would help prepare us better to usher in an era of common Asian currency. Mundell (2000) points out that an Asian common currency without the involvement of Japan and China is unrealistic. However, given the differences in the political regimes of the two economies, he expects that it is unrealistic to consider a common central bank that issues a single Asian currency. To get moving, the countries of the region must work to get a free trade agreement in place. At the same time, The different central bank Governors should start coordinating their work-in inflation, in interest rates, in foreign exchange reserves, so that both the external value (as measured by the value against the dollar) and the internal value (as measured by inflation) of all currencies moves in the same direction. That is, one country's rupee cannot appreciate if another country's currency is depreciating.
Concluded.
* Contributed by -
Harshdeep Jolly, Anshul Mittal & Pankaj Jain,
PGP 2,
IIM Bangalore.
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