Economic disparities portend a four speed proposed ASEAN monetary union with implications for regional financial and economic stability

Wenfa Ng
2016 Figshare  
Common market is the initiator of%0Athe European common currency and holds significant attraction for policy makers%0Ainterested in export driven growth to a greater populace and enjoying lower%0Aimport duties. But, a common market requires not only political concessions%0Afrom nation states, it also meant that significant amount of economic%0Aintegration in the areas of regulation, and cross border flows of funds and%0Areduced import tariffs to be put in place, an area where steep negotiation
more » ... steep negotiation and%0Aharmonization of regulations is necessary. Moving on from a common market to a%0Afree trade area and on to a common currency represents a challenge of different%0Anature and greater difficulty, chief amongst which the relinquishment of%0Asignificant hold on monetary policy making and, most importantly, cross border%0Afinancial flows, known to have potentiated financial disequilibrium in the%0Arecent past. Despite not being an optimal currency area where the relative%0Aeconomic strengths of nation states fall within narrow bounds where minor%0Aconcessions in rules concerning financial flow, bank reserve requirements,%0Aemergency lending and tariffs ensure financial stability in the bloc, the%0AEurozone remains economically stable despite a currency crisis due in large%0Apart to the emergency lending facility and quantitative easing programme of the%0AEuropean Central Bank. However, stability does not hide deep structural%0Aproblems in the two speed bloc as the industrial north of the region enjoys the%0Abenefits of a cheaper currency while the poorer south experienced gradual%0Adeindustrialization due to the punitive effects of a common currency stronger%0Athan its economic fundamentals. Similarly, the Association of South East Asian%0ANations (ASEAN), a grouping of 10 nation states with widely different economic%0Astrengths is working towards first a common market and a free trade area, and%0Amaybe, a future common currency. Based on economic mix and strength, the region%0Acan be divided into four groups%3A (i) Singap [...]
doi:10.6084/m9.figshare.4097691.v1 fatcat:l6awsenwxvbgbhpdac7rjgksxy