Adopting single currency in asean region analysis

Adopting the Euro in Post-Communist Countries 11 ent sets of variables might just have varying fits because of differences in measurement error. Journal of Public Policy 15 3— This is consistent with the view recently put forward by some authors that the optimum currency area criteria are themselves related to decisions on economic integration, so that the desirability of a currency union becomes itself partly a function of the underlying political choices, which helps to explain why currency unions generally correspond to TABLE 5 Bilateral Real Exchange Rate Variability Associated with Fundamentals In per cent Indonesia Malaysia Philippines Selected ASEAN Countries, Malaysia 11 Philippines 11 10 Thailand 11 9 8 Germany France Italy Selected European Countries, France 7 Italy 7 6 Spain 9 6 n.

Indeed, ASEAN is a region where some but by no means all policy makers are seriously considering the possibility of moving toward a common currency.

7 key challenges for the future of ASEAN - and how to solve them

Centre for Economic Policy Research. Tweet on Twitter International payments have had the perpetual challenge of inadequate measures when it comes to managing global liquidity.

Nevertheless, we are confident that the more plausible impact is the one shown in mod- els 6 and, later, 7. Let us now compare four models that hierarchically build on the three pure models cf. In addition, single currency also allow businesses to obtain better planning as it eliminated the fluctuation cost.

So that, policymakers have to put into action expansionary policy to handle high unemployment rate. At this stage, central standard bank may decrease the interest levels which plan to provide out money to businesses for expansion and therefore, deploy labor. Exchange Rate Cooperation in the European Union.

In an environment of volatility and uncertainty in post-communist Europe, macro variables of economic and historical-ideational factors have the strongest impact on public opinion. In this respect, the 7 The share of intra-regional trade in GDP may be overstated to the extent that it reflects trade of manufactured inputs for products ultimately destined for third markets.

Political parties that garner support for the euro should therefore concentrate on economic consolidation and political stability rather than politicizing a winner—loser cleavage. This is even more relevant to those countries that have called for public legitimation of eurozone entry by holding referenda.

In this regard, Diez Medrano stresses the importance of national histories arguing that support for the EU depends on the experience of casualties during the Second World War as a proxy for misery.

This is of importance because the introduction of the euro hinges on the performance of economic indicators. In turn, a weak national currency may increase support for the euro.

Without this, they will be left out by international investors. Thus, a floating exchange rate that concentrates a economic shock in the country from which it originates is not a fitting criteria for an OCA. The explanatory power of this integrated model is there- fore satisfactory and higher than any explanation hidden behind the control variables.

However, policymakers sometime just didn't see through illusion of business pattern, therefore lead to financial meltdown. Macroeconomic factors such as inflation, unemployment, and forex would affect the company value, stock results and risk evaluation. Clearly, a lower expected level of bilateral exchange rate variability implies a greater ability to forgo the benefits of a flexible exchange rate.

The next section analyses the potential benefits and costs associated with a currency union for ASEAN in more detail. Inflation does indeed affect organizations' performance as inflation incur costs on organizations. It is remarkable that ASEAN has survived for more than three decades because, at the time of its birth, many political observers had predicted that, like previous attempts at regional organisation, it would soon wither in the blast of the complex and hostile regional situation.

A former Thai finance minister and former central bank governor, M.R. Pridiyathorn Devakul, said this week that an an Asian currency unit should be used as the benchmark currency for countries in the region if they want to efficiently cope with currency exchange fluctuation.

I have been requested by the organizers of the Economix Conference to speak on ASEAN monetary cooperation and, in particular, the steps being taken towards an ASEAN single currency. I have to say at the outset that ASEAN does not have yet the conditions for an optimal currency area or currency union.

The anticipated outcome is the development of a framework for a single common currency area in the GCC region leveraging on the benefits of economic integration.

Adopting Single Currency in ASEAN Region: Analysis

In March ofU.S. Treasury Secretary Timothy Geithner let it slip that he was "quite open" to the idea of an eventual move toward a global currency run by the International Monetary Fund. Although many were surprised by this unusual announcement, the idea of a world currency is certainly not a new one.

A single currency would promotes economic growth of Asean region as transaction costs and fluctuation costs are eliminated which increases trade and investment within the region and attract investors from outside the region.

MSc Thesis in Finance The Feasibility of Optimal Currency Area for ASEAN after adopting the ASEAN Economic Community Blueprint in Does it facilitate the region .

Adopting single currency in asean region analysis
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