ADB rules out possibility of monetary union in Asia

FRANKFURT: Asian Development Bank (ADB) President Takehiko Nakao ruled out the possibility of monetary or currency union in Asia in the near future, saying the region needs political stability in order to deepen reforms for establishing linkages with other parts of the world.

“Asia needs to deepen its reforms by learning lessons from others,” Nakao said at a panel discussion on the cooperation between Asia and Europe on the second day of ADB’s annual meeting here on Tuesday.

“We can also learn from EU about their regulatory regime and harmonised mechanism to promote trade. However, I will ask my grandson to think about monetary and exchange union in Asia.” 

President ADB said there is need to end conflict from the region and ensure political stability.

“The moderate Islamic states in Asia need stability,” he said. “Investment will be critical for meeting infrastructure requirements.”

The ADB chief said Asia should not be complacent and macroeconomic stability is important because it could pave the way to promote development.

“ADB is making efforts to develop Asian bond market which could play an important role to meet funding requirements,” he said.

“There are many worries about the banking sector so developing of bond market will be quite important.”

Experts from the International Monetary Fund, Germany, European Union, Japan and China dwelt upon discussing outcome of China’s slowdown on the economy of Asia and Europe. 

They said diversification of economies are required that could play an important role for achieving the right kind of linkages among different regions.

China possessed current account surplus in the range of 10 percent of GDP prior to crisis of 2008 which had now shrunk to 2.5 percent of GDP but still it possessed capacity to undertake important projects to establish corridors within Asia that could help build connection with other parts of the world.

One expert said there is need to deepen reforms in the bond market that could help generating funds needed for various projects in more efficient manner.

The EU representative said the confidence played the most important role. “Chinese companies are investing in Europe and it got immense importance in media,” he said.

Germany’s representative said they could learn lesson from Japan’s demographic dividends. 

Japan’s representative said the recovery is possible by pursuing macroeconomic stability and reform process.