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Miyazawa wary over idea of single Asian currency

| Source: REUTERS

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.

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