Miyazawa wary over idea of single Asian currency

Miyazawa wary over idea of single Asian currency

TOKYO (Reuters): Finance Minister Kiichi Miyazawa said on
Tuesday Japan should tread cautiously toward forming a single
Asian currency, saying there was little point in promoting the
idea when not all countries in the region were enthusiastic.

Asian nations have been trying to strengthen their ties to
prevent a repeat of the region's 1997 financial crisis, and the
single currency is one idea.

"I am not keen about this since there are countries which are
less enthusiastic than others," Miyazawa told reporters, without
elaborating. "Such moves should come naturally."

Japan and France have proposed that Asian countries adopt a
managed float for their exchange rates, an idea that advocates
say could grow over the long-term into the embryo of a regional
monetary system along the lines of Europe's exchange rate
mechanism.

Japan's longstanding proposal, which won France's backing in
January, would see central banks aiming to hold a currency in a
band either side of a basket of currencies as opposed to a pure
free-float regime.

But divisions have emerged among Asian countries over another
pillar of Asia's emerging monetary framework -- a support
mechanism for the region's currencies agreed by finance ministers
in the northern Thai resort of Chiang Mai last year.

"The Chiang Mai initiative has also taken a long time and so I
think we need to be careful," Miyazawa said, referring to an
Asian currency swap scheme being discussed among the 10 members
of the Association of South East Asian Nations (ASEAN) as well as
China, Japan, and Korea.

The currency swap plan, known as the Chiang Mai initiative,
envisages linking the international reserves of ASEAN countries
-- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand, and Vietnam -- with those of
Japan, South Korea, and China (ASEAN+3).

ASEAN finance ministers agreed at the weekend in Kuala Lumpur
that the swap scheme would be "complementary and supplementary to
IMF (International Monetary Fund) facilities".

But it appeared some differences still existed among Asian
officials over how it should be linked to the IMF programs.

ASEAN finance ministers also agreed at the weekend that the
yen's recent weakness was creating instability in the region's
financial markets.

Miyazawa said he had such concerns in mind but had no
intention of controlling the yen's movements by intervening in
the market.

"We told Asian partners at the weekend meeting of deputy
finance ministers from ASEAN+3 that Japan would not drive the yen
weaker to ensure the nation's economic recovery," Miyazawa told a
parliamentary committee.