If There's a Common Currency, Can ASEAN Compete With the European Union?

Why i can say that?

First of all, we must understand the principles and history of the formation of the European Union and ASEAN.

Why don't ASEAN countries / have not created a common currency?

Very difficult, I can even say almost impossible in the medium term ahead.

Why?

I will first compare ASEAN with the European Union here because the European Union is an example of a region that can implement a single currency relatively successfully. There are 3 reasons why it is impossible for ASEAN to create a common currency

F irst, the basic principles of the European Union (EU) and ASEAN are different.

At the outset of the predecessor organization (EU), the European Coal and Iron Community (ECSC) was created on the principle that ECSC member states ceded some of their sovereignty to a supranational organization. Thus, the ECSC countries grant sovereign rights to regulate the production, distribution, and consumption of iron and coal to the ECSC. This continued and developed until the ECSC countries formed the European Economic Community (EEC), where the EEC member countries gave and handed over some of their sovereignty in the economic field to the EEC. Until in the end, the Euro currency was applied to the majority of EU member countries, which means those who use the Euro give up their sovereignty in the monetary field.

This alone is inversely proportional to the basic principles of ASEAN. ASEAN was formed in 1967 to safeguard the sovereignty and safety of Southeast Asian countries from the influence of Communism. So, the principle of ASEAN is non-intervention and the preservation of sovereignty. Therefore, the implementation of the single ASEAN currency will take away the sovereignty of each ASEAN member country in monetary terms so that they cannot freely regulate their own monetary policy.

One example is Greece. In 2008, there was a debt crisis in Greece which was exacerbated by the global economic crisis. Greece cannot quickly handle it through the monetary sector because it has to coordinate with other countries that use the Euro. Since each country has its own interests, it will be very difficult to reach a consensus that satisfies all parties.

Second, the unequal economic conditions in ASEAN.

If we look at the Eurozone countries, I think their economic conditions are relatively even. Their living conditions are relatively even and their nominal GDP per capita is relatively evenly distributed among the Eurozone countries. At least there are a few that are slightly different. The level of development in the Eurozone countries is also not too different.

Look how sparse Singapore and Myanmar are. Then, the economic conditions of ASEAN countries are very unequal. There is a developed Singapore and Myanmar which is the least developed country. The level of development is also very different between ASEAN countries. Not to mention the different directions of the economy. Vietnam, for example, is concerned with the manufacturing economy, while Singapore is more concerned with banking.

Third, there are huge differences in monetary interests among ASEAN countries.

In the European Union, they are relatively able to reach a consensus on monetary policy due to the condition and direction of their economy which tends to be evenly distributed.

In ASEAN, this is nearly impossible. For example, Singaporean countries want their currency to float within a certain range. Therefore the Singapore currency can be very strong because the value of the currency reflects its financial strength. Meanwhile, manufacturing-oriented countries such as Vietnam, Indonesia, and Cambodia tend to want to keep their currencies weak to reduce imports and motivate foreign companies to open factories there with cheap human resources.

Reaching a consensus between countries that want their currencies to be held low and those who want their currencies to float freely or even tend to want to be strong will be extremely difficult.

Not to mention when there is a financial crisis. Having your own currency means you can make monetary policy quickly and adaptively. If you have a common currency, then you must first negotiate with other countries that have other interests that may conflict with ours.

Therefore, I can say that the prospect of a single ASEAN currency is very difficult and even almost impossible

Nabillionaire, www.thetalks.id