Governor of the Bank of Thailand M.R. Pridiyathorn
Devakula recently discussed the need for a 9-nation regional currency to
reduce dependence on the US dollar and boost regional trade.
Speaking at lecture on “Regional trade: the hope of
Southeast Asia”, organized by the Thai International Chamber of Commerce,
Pridiyathorn said that nine Asian nations – Thailand, South Korea, Taiwan,
the Philippines, Singapore, Hong Kong, China, Malaysia and Indonesia –
were increasing their role in global trade, and that inter-regional trade
was on the rise.
The BOI governor said this contributed to the growth of
countries in the Asian region as he compared Asia to the G-3 grouping
comprising the US, EU and Japan, where the value of inter-regional trade was
minimal.
“The economic slump in Europe, the US and Japan meant
that last year trade among the nine Asian countries grew only 14.2 percent,
but exports among these same nine Asian nations expanded by as much as 24.3
percent. This trend was apparent from the fourth quarter of 2001, and growth
will proceed in this direction for some time. Investors should attach
importance to this and find new investment pathways”, Pridiyathorn said.
He advised the government’s of all nine countries to
cooperate in three areas in order to smooth the way for growth in regional
trade.
Firstly, governments should promote free trade, such
expanding the ASEAN Free Trade Area (AFTA) to include other countries.
Secondly, the governments should boost monetary cooperation, with
export-import banks of each country establishing a central promissory note
market for mutual trade.
“This could be located in Singapore or Hong Kong, which
are already financial hubs. If there is already buying and selling in the
market, trade financing will emerge by itself. All the countries have signed
initial agreements and now have to push further and ensure that markets are
receptive. If the will is there, this should be successful,” Pridiyathorn
said.
Thirdly, he advocated the establishment of regional
controls to ensure that the exchange rates of all nine countries were
broadly in line. If some countries used a floating exchange rate while other
exchange rates were pegged, this would pose an obstacle to mutual trade.
Regional currencies could be stabilized in several ways;
for instance, by giving financial assistance to countries with fiscal
reserve problems, or by assisting such countries by importing goods from
them. This in the future might lead to a regional currency, which would
reduce dependence on the dollar. (TNA)
