Common Currency

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HARVARD MODEL CONGRESS ASIA 2013
INTERNATIONAL PROGRAMS

A COMMON CURRENCY FOR A
COMMON MARKET: A GOOD IDEA?
By Angie Peng
Introduction
The idea of having a common currency for the
Association of Southeast Asian Nations (ASEAN) has
been mentioned many times before, and it continues to
be a topic of discussion. A common currency means that
a single monetary system would be common to all
countries that are a part of ASEAN, and that this
currency would be accepted and exchanged within each
of those nations, eliminating the need to exchange the
different currencies of each nation. Even though this idea
has a long history, it has recently become more
controversial due to the struggles of another system of
common currency–the euro zone. The euro zone, also
called the euro area, consists of a group of 17 European
Union countries that share a single currency, called the
euro, which is the sole legal currency of each nation.
While having a common currency has its benefits,
including making it easier to promote tourism across
nations, encouraging easier business transactions with
the region, and reducing exchange rate confusion, there
are also many difficulties associated with switching to a
system of a common currency. One of the biggest
difficulties is accounting for the different stages of
development of each nation. ASEAN includes some of
the world’s most developed economies as well as a
number of developing economies. Combining these
various stages of development into a single currency
system will mean some friction and disagreement over
determining the strength of the currency against other
countries’ monetary systems. While “accelerating
economic growth” has been one of the primary reasons
for the existence of ASEAN, creating a common



currency is not the only way to do so. There have been
many ideas proposed to further integrate the economies
of the ten ASEAN members for a more interconnected
“ASEAN market,” and creating a common currency (of
any degree) is only one of those ideas. As delegates,
your job will be to determine the most efficient and
feasible plan for the economic growth and integration of
ASEAN member states. With the recent global recession
and economic struggles of European nations, now is a
crucial time for ASEAN in terms of policy and the
direction of its future economic growth. At the center of
this debate is the question of whether or not adopting a
common currency for all ASEAN members would be
more beneficial than harmful for the progress of these
ten nations’ collective economic future. It may not be the only option, but it is an important one to consider.

Explanation of the Problem
Historical Background
The Association of Southeast Asian Nations
(ASEAN) was created in August of 1967 by the signing
of the ASEAN Declaration (also known as the Bangkok
Declaration) by the foreign ministers of the original five
nations of ASEAN–Indonesia, Malaysia, the Philippines,
Singapore, and Thailand. The aim of such an association
was to promote “economic growth, social progress, and
cultural development” in the region as well as to
promote a general sense of cooperation between the
nations of Southeast Asia. These five countries are
sometimes referred to as the “founding fathers” of

ASEAN-Common Currency – 1


HARVARD MODEL CONGRESS ASIA 2013
ASEAN to differentiate them from the five other
countries that later joined: Brunei in 1984, Vietnam in
1995, Laos and Myanmar (Burma) in 1997, and
Cambodia in 1999. Today, the ten member states of
ASEAN cover a land area of approximately 4.5 million
square kilometers with a combined population of a little
less than 600 million people. The combined nominal
gross domestic products (GDP) of the ten nations is
just under $2 trillion USD with a per capita gross
national product (GNP) of approximately $500.
Altogether, these ten nations contain about 15 percent of
the world’s coastline...
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