| Finance minister P. Chidambaram in Hyderabad on Saturday. (AFP)
Hyderabad, May 6: India wants to join, but other Asian nations don’t think India is ‘Asian’ enough to be part of the regional currency club.
Yesterday, Asean countries took small steps towards a common Asian currency by commissioning a study on the viability of creating an index of the region’s currencies that could be a precursor to a common exchange unit.
Today, finance minister P. Chidambaram threw broad hints at a meeting of the board of governors of the Asian Development Bank, which will be conducting the study, that India wants to join the currency club.
“On the initiatives for monetary and financial co-operation and integration, I urge the bank to follow an approach of consensus and inclusion rather than be exclusionary in its approach,” he said.
But Chidambaram, who is the current chairman of the Bank’s governing board, could not make much headway. Asean countries are willing to take on board only China, Japan and Korea for now. Nobody is saying no to India, but it’s not yes either.
Not even ADB president H.Kuroda, who is otherwise believed to be a Chidambaram supporter on the board, would commit himself to India joining in the effort to set up the Asian Currency Unit.
However, most ministers here agree that a currency union may take a “whole generation”, or 25 years, to come about.
Asian Development Bank vice-president Liquin Jin told The Telegraph, “Real economic integration is what we should be aiming for. Look at Europe, a monetary union came only when they reached the peak of an economic integration process '. It will take a long time to happen in Asia.”
India has a problem in joining right now. It does not have a fully convertible currency, and hence, can hardly be compared with other currencies in the index.
The idea of a single Asian currency and of integrating the region’s economies surfaced after the financial crisis of 1997-98 and has since been backed by the ADB.
India was accepted by the East Asian Forum, a nascent economic community of Asean states, Japan, Korea and China, as a full member in December. However, it still feels left out on talks for greater monetary integration.
But the plan for a monetary or even an economic union has many detractors too. The European shareholders of the Asian Development Bank as well as some Asian states feel the ideas are premature and beyond ADB’s mandate.
Some feel this is a bid by Asean and the Japanese government to protect their influence on Asia’s money markets, which are increasingly being influenced by the Chinese currency.
But one plan which India sought today had few detractors. Chidambaram told ADB members that since the bank was making good profits even as its cost of borrowing was falling, it should reduce interest rates charged. With virtually most of the members being borrowers themselves, the proposal drew overwhelming support.