ASEAN as an Optimal/Nonoptimal Currency Area

Economists have been arguing to this day about the benefits and risks of introducing a community currency. It is very difficult to clearly determine which side is right. Most often, scientists refer to the example of the so-called Eurozone, but it is still far from reaching an agreement between supporters and opponents of such a solution. This paper presents the issues of monetary integration in ASEAN+3 (i.e. ASEAN member countries, China, South Korea, and Japan) in terms of the optimal currency area and other necessary conditions for the creation of a sustainable development region. The researchers argue about whether ASEAN+3 should introduce a single currency. Some suggest that the group meets several OCA theory criteria, i.e. labour mobility and economic openness. According to the results of the study, ASEAN+3 is an economically diverse area and there is a lack of institutions enabling effective monetary integration in the short term. Optimization assumptions included in the analysis determine the real chances of development and survival within the currency area. The author's analysis has indicated that ASEAN+3 should not introduce a single currency for three reasons: failure to meet the optimization criteria, diversification of socio-economic development, lack of an institutional framework and inconsistency in the perception of monetary integration. On the other hand, it should be noted that a single currency could contribute to increasing the monetary security of the entire South-East Asian region, which means that the ​​monetary integration may be a long-term idea.

Frankel and Rose’s Introduction to the Endogeneity of Optimality: A Model Limited to the European Monetary Experience

This article discusses Frankel and Rose’s (1997, 1998) introduction to endogeneity, which was the result of scrutinizing the optimal currency area (OCA) theory through the evaluative lens of European monetary integration and unification in the 1990s. It cannot be generalized to another monetary union. The development of endogeneity interrelates five different criteria (common currency; transaction costs; commercial integration; economic convergence; and diversification of production) to argue that the introduction of a common currency leads to economic convergence among the participating countries. Frankel and Rose’s choice of analytic criteria arises from empirical studies on European monetary unification, following the OCA framework. The empirical studies found to have influenced the authors can be divided into three themes: the microeconomic benefits of a common currency; the optimality of European countries; and adjustment mechanisms. However, as shown by the selection of certain criteria, the influence of the Emerson report (1990), and the price-stability orientation of fiscal and monetary policies, their proposal only works within the monetary and economic conditions of the future eurozone area.

Empirical Study on the Prospects of Asean's Trade and A Single Currency

The paper seeks to explain the nature and prospects of trade and monetary integration in ASEAN during 1990-2017.Growth,structural breaks of Intra export and intra import shares of ASEAN including external trade were shown and influencing factors like GDP, FDI, REER,openness and inflation were regressed with them. Short run and long run causalities were observed among the said variables through cointegration and vector error correction models.Monetary integration was explained through capital market development especially in share and bond markets and in currency convertibility. Optimum currency area criterion was tested through Beta and Sigma convergence hypothesis which proved that the adoption of single currency in ASEAN is now not feasible.

Niels Thygesen: An Academic in the Making of European Monetary Union

Niels Thygesen (born 1934) played for nearly five decades an influential role as a policy orientated academic, especially in the process of economic and monetary integration in Europe. He is especially known as a member of the Delors Committee and as the first Chair of the European Fiscal Board. As part of a re-search program on collecting memories, this paper publishes the results of several interviews with him. His early life offers insightful observations on the develop-ment of the economics profession in the postwar years (he was close to Nobel Prize laureates as Franco Modigliani and Milton Friedman). Thygesen's involvement with the process of European monetary integration really started in 1974 with his membership of the Marjolin Committee (which provided an assessment of the failure of the 1970 Werner Report). Since then he has been involved in a multitude of committees and initiatives, like the OPTICA groups, the All Saints Day Manifes-to, the Committee for Monetary Union in Europe (an initiative of Giscard and Schmidt) and the Euro50 Group.

Monetary Expert on Monnet’s Action Committee for the United States of Europe

Robert Triffin played a key role in the debates on European monetary integration, especially as the monetary expert of Monnet’s Action Committee for the United States of Europe. He developed proposals for European monetary cooperation, especially a European Reserve Fund and a European currency unit, inspired by his experience of the European Payments Union. In his view, a European Reserve Fund could be constituted by pooling 10% to 20% of the international reserves of the member states’ central banks. A key moment was the 1969 Hague summit when Triffin, via Jean Monnet, provided the German chancellor Willy Brandt with a plan for European monetary integration. Moreover, through his activities and connections in the world of commercial banking and finance, Triffin also actively promoted the European currency unit as a parallel currency in financial transactions and markets.