Monday, March 27, 2006

An Asian Currency Unit?

Bickering delays Asian currency unit launch
Victor Mallet
Financial Times

The Asian Development Bank's (ADB) proposal to create an Asian Currency Unit (ACU) to develop bond markets throughout Asia and increase monetary cooperation between Asian countries has run into difficulty. Of the many difficulties this proposal is facing, the most significant is disagreements over which currencies to include. Presently, the currencies to be included are the South East Asian countries and Japan, South Korea and China. However, financial markets are unlikely to be impressed by an ACU that does not contain the important Hong kong Dollar or the Indian Rupee while including currencies of nations such as Cambodia and Brunei. ADB officials have also been quick to distinguish the ACU from the European Currency Unit (ECU) stating that the ACU is “not an official kind of currency unit like the Ecu."

While the concept of an ACU seems to be good in theory, a number of hurdles will have to be crossed before such an Unit can come into being.

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