Leaders of Southeast Asian nations are obviously unimpressed with Japanese efforts to boost the yen's appeal as an international currency of trade.
Just a week after Japan announced it was convening a panel to explore pruning zeros from the yen -- a redenomination that would leave the currency trading near parity with both the euro and the dollar -- leaders of the
Association of South East Asian Nations
, or ASEAN, have begun publicly mulling over the development of a regional currency. The idea has gained such, er, currency, that the organization's summit meeting in Manila this weekend is taking up the topic, as well as the launch of an Asian free-trade zone by 2002.
How this will go over with Japan, China and South Korea, which will be participating in the summit, is an open question. Japan has the region's most developed economy and the yen is involved in about two thirds of all Asian currency trades. And if Prime Minister
has anything to say at the summit, he will undoubtedly remind ASEAN of the roughly $82 billion Japan has committed to East Asia since 1997, as well as the additional money it is expected to dish out for Asian technological development.
China could also scoff at the idea of a regional currency. With its hopes of
World Trade Organization
ascension growing, it will likely want the spotlight, or at least a goodly amount of time in it. China, and its potential market of 1.2 billion people, thinks it will be the growing center of Asian trading over the next 50 years. It will jealously protect its currency sovereignty.
In addition to national pride, religious and cultural issues continue to tear some Asian nations, like Indonesia, apart. Historical tensions deeply divide China and Japan. And a territorial dispute involving some barren, rocky islands in the South China Sea and the six countries that claim them underscores the difficulties of creating and maintaining a consensus in the region.
However, many Asia watchers sympathize with the currency idea, which could help the region maintain robust economic activity, as many hope the euro, the
1-year-old currency, will.
"It's theoretically possible to have a new Asian currency, as long as the Japanese, Chinese and South Korean economies become the anchor," says Taiyo Suzuki, senior economist at
Japan Research Institute
, a private think tank. "It may have taken Europe over 50 years to develop the euro but the pace of globalization has quickened very dramatically, so a new currency can be in the works much sooner."
One Japanese official who might applaud the concept is former Japanese Finance Ministry bigwig Eisuke Sakakibara, who will deliver a speech with
Economic Planning Agency
chief Taichi Sakaiya on Thursday. Sakakibara, dubbed "Mr. Yen" for his ability to move the foreign exchange market, was a proponent of creating a regional fund similar to the
International Monetary Fund
after the 1997 Asian financial crisis, and he has continued to stress regional economic cooperation.
With ASEAN nations expecting 2% to 3% economic growth this year, leaders will also be keen to see what Sakaiya has to say about Japan's growth prospects. Recently Japanese officials appear to have grown confident the country can achieve a 1%
gross domestic product
growth rate for 2000.