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An A sian Currency Unit: Simulations for Its Effects on East Asia
Author(s) -
Yeh KuoChun
Publication year - 2013
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12097
Subject(s) - economics , currency , unit of account , east asia , exchange rate , unit (ring theory) , constraint (computer aided design) , monetary economics , international economics , common currency , currency crisis , monetary policy , china , geography , mechanical engineering , mathematics education , mathematics , archaeology , engineering
An A sian currency unit ( ACU ) is necessary to deepen A sian financial markets and to convert national currencies into a single monetary policy. However, the experiences of the E uropean C urrency Unit and the E uropean Exchange Rate Mechanism crisis in 1992–93 have indicated the danger of the so‐called gradual approach. This study evaluates the effects of welfare should the ACU indicator become a long‐term constraint of the P eople's R epublic of C hina and J apan, the big two in East A sia. Our results indicate that the constraints of countries’ own baskets (e.g. real effective exchange rates) are still better before the launch of a true single currency. That is, pegging to an ACU indicator could hardly be sustained in the long‐run if East A sian countries have not reached a consensus about a regional monetary union.