|
There's a certain irony to the Asian Development Bank holding its annual meeting in Europe.
The Manila-based lender did so last week in Spain, one of the 11 nations that in 1999 embraced a single European currency. The euro area has since grown to 15 members and many in Asia want to replicate the enterprise. Much of the talk in Madrid surrounded accelerating that process.
There's no firm time-table, nor do Asian leaders regularly refer specifically to an Asian euro. They prefer to couch it in terms such as "regional integration" and "economic interconnectedness".
The ultimate goal is a common Asian currency shared by as many as 16 economies.
That ambition made the location and timing of this year's ADB meeting strangely apropos, just as the euro suffers tensions of its own. There's much Asia can learn from Europe's experience.
The euro improved econ-omic efficiency in a region with output comparable to the US's. Exchange-rate volatility has been eradicated and financial markets are deeper and more flexible. Intra-European trade has blossomed. The euro is becoming a viable alternative to the dollar, which has fallen roughly 45 per cent over the last six years.
Europe's monetary union isn't perfect. One problem is the euro's strength, which is crimping exports. There's a bigger one: European Central Bank policies are at odds with the conditions of some economies. Spain is a case in point. Europe's fifth-biggest economy is grappling with the fallout from a housing bubble.
ECB's example
In recent years, weakness in economies such as Germany prompted the ECB to pursue accommodative monetary policies. That was hardly what Spain and Ireland needed and the result was predictable American-style asset bubbles.
Now that Germany is performing well, Italian Prime Minister-elect Silvio Berlusconi and French President Nicolas Sarkozy want the ECB to cut interest rates. Europe's experience demonstrates the difficulties of one central bank controlling money in more than a dozen separate economies.
Travelling around Eur-ope, one also hears much griping about how the introduction of the euro sparked inflation that isn't captured in official data. Anyone who visited Italy, Portugal or Spain before and after the euro may be tempted to sympathise with such theories.
Europe's troubles may pale in comparison with what Asia will experience on the road toward its own single currency.
It took Europe 30 years of planning, negotiation and hard work to create a single currency. The process unfolded amid relative trust after World War II. The continent was endeavouring to maintain peace and build prosperity at a time when the US and Soviet Union were engaged in an arms race.
Asia lacks anything approaching that trust. Tensions over the past mean its three biggest economies - China, Japan and South Korea - are barely on speaking terms. Hu Jintao's trip to Japan last week is the first by a Chinese president in a decade and marks an important step forward. Asian relations still have a long way to go.
|
