ASEAN common currency idea wins ground

ASEAN common currency idea wins ground

MANILA (Reuters): The idea of a common currency for the 10- member Association of Southeast Asian Nations (ASEAN) has gained ground but is still far from becoming reality, the grouping's head said on Friday.

"The significance is that it has started to be talked about," ASEAN Secretary-General Rodolfo Severino told reporters. "We are at a very early stage...but I am surprised at the receptivity on the desirability of a common currency.

"Before the (Asian financial) crisis, this was unthinkable."

But he added it had taken Europe 50 years to adopt a common currency and only 11 countries in that region were involved n the exercise. " There are many considerations to be worked out...it would strike at the role of national central banks," Severino said. "Studies are now being carried out by academic circles and think- tanks."

ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. A common currency would facilitate regional trade and reduce dependence on major currencies, Philippine President Joseph Estrada said on Thursday.

Severino said the next step would be for regional leaders to set some general targets for considering the plan, although it was not certain if this would happen at an ASEAN summit to be held in Manila late next month.

A meeting of ASEAN finance ministers which will precede the summit will discuss the second report of a surveillance commission set up by the group to prevent another regional financial crisis, he added.

Deputy finance ministers and deputy governors of central banks in the region will discuss the draft of the report, being prepared by the ASEAN secretariat, at a meeting in early November, he said.

"There is some concern that because economies are recovering faster and earlier than expected, reform efforts may slacken," Severino said.

"At a national level, there is no sign of a slackening. At the regional level, ASEAN has been trying to ensure the reforms continue," he said.

The finance ministers will also discuss a common ASEAN stand to be taken at the Seattle round of World Trade Organization talks and the need for social safety nets in member nations, he added.

The summit itself could discuss a Philippine plan for an East Asia security grouping and a code of conduct on the disputed Spratly Islands, Severino said.

The Spratlys, a collection of barren islands and reefs in the South China Sea, are believed to be atop vast reserves of oil and gas and are claimed wholly or in part by China, Taiwan, Vietnam, Brunei, Malaysia and the Philippines.

Chinese, Japanese and South Korean leaders will also join the 10 ASEAN nations at the summit, Severino said.

Meanwhile, AFP reported that Hong Kong's Financial Secretary Donald Tsang has suggested that Singapore and Hong Kong consider adopting a common currency which could later be widened to the rest of Asia.

He said Hong Kong was prepared to give up its currency peg to the US dollar in order to join such an undertaking and asked Singapore to also give up its managed float for its currency.

"We are thinking in terms of a horizon of five to seven years. Everyone will have to make a compromise somewhere," Tsang said in an interview published in the Singapore Straits Times.

"I feel brave and courageous in even uttering these words. It's the unthinkable. But we must think the unthinkable now," he said.

The daily Tsang made the remarks in the context of a prospective new global financial architecture and also in his own conciliatory comments downplaying the economic rivalry with Singapore.

The Monetary Authority of Singapore (MAS), the de facto central bank, is not keen on internationalizing the Singapore dollar.