Should ASEAN countries adopt common currency?

Added on - 21 Apr 2020

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SHOULD ASEAN COUNTRIES ADOPT COMMON CURRENCY?2Should ASEAN countries adopt common currency?A currency union is a state achieved when two countries come together and decide toadopt a common currency to keep the value and certain level of their currency. The main aim ofthe adoption of the currency union is the management and synchronization of the monetarypolicies of the countries (Hem, Subhash, & Puneet, 2015). A currency union is also known as themonetary union. The states enter into different treaties with the aim of achieving the currencyunion. This means that the countries will have to share a common currency while transacting. Inaddition, the currency union may be limited in further integration according to the treaties whichthe countries are able to sign. Additional combinations of issues such as the single market for thecountries may be adopted with the view of giving the currency union strength.In the past, currency unions have been adopted, and there are different challenges andpros which come with it. The main goals of these past currency unions have been to facilitatetrade among the countries and strengthening of their economies. Moreover, the unifying factor ofthe currency union has been looked at. The main reason is that the common currency is able tounite the countries since they are operating from a common currency base. But the currencyunion is not as simple as it may sound (Albertin & IMF Institute, 2008). History in the way eurohas faced with the currency union should be a teacher in any countries who are thinking of thesame move. The pioneers of the Euro, which is a common currency for the European nations hada great dream that the currency will overtake the US dollar and become a dominant reservecurrency. But decades are passing, and troubles with the Euro are increase deeming the dreamfurther. The Greek debt is affecting the Euro and meaning that the other countries in this treat arebeing affected as well. The debt issue is one of the key lessons which the monetary union for anycountries should be able to learn. Monetary crisis in one of the members’ countries will be able
SHOULD ASEAN COUNTRIES ADOPT COMMON CURRENCY?3to affect the progress of the other countries concerning their economic development andmonetary factors. In addition, this slow down on some countries on eurozone has turned the heaton the political arena on the countries in these regions (Binner, 2011). The common currency inthe eurozone is not uniting these countries. The main aim of the Euro was to create harmony andpeace. Now some of the countries in the zone are viewing others with anger and distrust. Theyare blaming them for their economic problems and lack of progress.In addition, economic growth is the key goal of any country. The analysis on the growthachieved by the euro union is a critical indicator that the currency union is unlikely to solve theessential problems in the individual countries (Friberg, 2013). Nevertheless, the currency unionwill be able to drag the other countries prospering into the economic pit. The chart below showsan overview that countries with their national currency were able to enjoy more economicdevelopment averagely that the euro union countries. The development record is a key lessonwhich the ASEAN should be able to learn before adopting any currency union.Figure1: comparison of development record in non-euro and euro countries
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