The Philippines is lukewarm to the idea of having a single currency for Southeast Asia, saying such a move is unnecessary just so member-countries can further integrate and make the region a major economic force.
According to the Bangko Sentral ng Pilipinas, the Philippines and other members of the Association of Southeast Asian Nations (Asean) are poised to achieve the goal of boosting economic growth of each member-country through various mechanisms, such as increased trade, integrated financial systems and freer movement of labor.
“We don’t need a single currency (for Asean) in order to achieve economic integration and faster growth,” BSP Governor Amando Tetangco Jr. said, adding that the adoption of common legal tender for the region may complicate, instead of facilitate, achievement of development goals.
His statement came amid suggestions to temporarily shelve the idea of a common Asean currency, especially since the eurozone is still confronted with a crippling debt crisis.
Economists said there are advantages and disadvantages of having a single currency for various countries belonging to the same region. But for the Asian Development Bank, pursuing talks about this idea is not prudent at the moment.
ADB chief economist Chanyong Rhee earlier said it is better for Asean to first see how the eurozone economies solve their debt problems and wait for the conclusion as to whether the adoption of the euro was beneficial or not.
“Having a single currency and a large union may create problems. Let’s see how they solve their problems and then study whether it is still prudent to have a single currency for Asean,” Rhee said.
He said Asean can be a major growth force in Asia and the world, like China and India are, once they buy and sell more goods from one another, link their financial systems for relaxed cross-border investments, and ease rules on overseas employment.
An advantage of having a common currency is that it can ease intra-regional trade, economists said. This is because a trader need not exchange currencies to buy goods from another country.
But economists also noted disadvantages, especially when member-countries have wide gaps in economic development levels. In particular, the difference in the prices of goods and services among member states becomes obvious under a single-currency scheme.
Consequently, the country where scale of production of goods and services is smaller, and thus costlier, may find it difficult to compete in terms of price with a country that has a bigger production capacity.
Moreover, the country where labor costs are higher may lose a significant number of investors.