Asia can start discussions on a shared currency to avoid intra-regional exchange rate complications, Asian Development Bank president Haruhiko Kuroda said on Monday.
“I hold the view that we can start discussions and seriously discuss this issue,” he said at a lecture. “Although it may take decades, eventually I think we may be able to establish a common currency.”
Asian governments have been debating the merits of a shared currency since the region’s economies were rocked by a financial crisis a decade ago.
Creating a common currency does involve overcoming hurdles, Kuroda said. These include the need to have a common market, some harmonization of macroeconomic policies, a regional central bank that would require regional countries give up their currencies and independent monetary policies, he said.
Asean members agreed with Japan, China and South Korea in May to start a $120 billion (Rs5.80 trillion) foreign-currency reserve pool by year-end, to be used in times of turmoil as the region sought ways to shield its economies from the worst global recession since the Great Depression.
Kuroda said he doesn’t expect central banks that are large holders of dollar-denominated assets to sell out of those holdings.
The central banks are locked in because they would incur large losses by selling the dollar assets, he said.
The dollar’s status as the world economy’s sole reserve currency has come into question as leaders of Brazil, Russia, India and China discuss substituting other assets for their dollar holdings amid a ballooning US budget deficit.
Russian President Dmitry Medvedev this month proposed that nations use a mix of regional reserve currencies to reduce reliance on the dollar.