Asian economic community..!

There has been a debate in recent times to form an Asian Union with a single currency . The initiative was taken by japan with the intention of creating a economic giant challenging the might of the US and Europe. Such a union would ensure low tariff rates among member countries and promote trade and capital flows. Moreover, it can make Asia immune to western financial disturbances to a certain extent.

There are several obstacles which can hinder this development. First of all, different asian countries are at different stages of development and they require specific monetary policies. A single central bank might not be able to fulfil conflicting interests especially in the case when the business cycles of these countries don't match. Secondly, the political relationship between many asian countries is not amicable and it may result in sabotage tendencies like having huge fiscal deficit and financing it by printing money which can lead to inflation in member countries.Thirdly, asia represents a large landmass and it would be difficult to monitor the implementation of single currency. Finally, the nationalistic sentiments in many asian countries would make it difficult for them to part with their national currencies and cede authority to some supranational central bank.