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Vu, Nhu --- "The Evolving Role of the Asian Development Bank in the Creation of an Asian Currency Unit" [2011] ELECD 475; in Buckley, P. Ross; Hu, Weixing Richard; Arner, W. Douglas (eds), "East Asian Economic Integration" (Edward Elgar Publishing, 2011)

Book Title: East Asian Economic Integration

Editor(s): Buckley, P. Ross; Hu, Weixing Richard; Arner, W. Douglas

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849808682

Section: Chapter 13

Section Title: The Evolving Role of the Asian Development Bank in the Creation of an Asian Currency Unit

Author(s): Vu, Nhu

Number of pages: 18

Extract:

13. The evolving role of the Asian
Development Bank in the creation
of an Asian Currency Unit
Nhu Vu

In 1966, the Agreement Establishing the Asian Development Bank
(ADB)1 came into force to foster economic development in Asia. Partly
motivated by a desire to invest surpluses, and recognizing Asia's need for
development capital, Western countries established the ADB at a time
when Asia was starved of capital. Currently however, some Asian coun-
tries have much less poverty than they did 40 years ago and now generate
huge capital surpluses. Because of these changes, some have argued that
the ADB should lend less and focus instead on becoming an economic
coordinator to ensure regional stability throughout Asia. This chapter will
examine the legal authority of the ADB in pursuing such regional coordi-
nation and stabilization activities, focusing on the ADB's project to create
an Asian Currency Unit (ACU).
The purpose of the ACU would be to serve as a currency index. It would
be based on a `basket' of the weighted average of currencies of Asian
countries and would probably also include the euro and the dollar.2 The
primary purpose of the index would be to bolster capital markets so that
regional countries could be more resistant to external shocks by facili-
tating exchange rate adjustments.3 Other benefits of the ACU would
include lessening dependence on extra-regional currencies to serve as
regional reserves, alleviating global imbalances, reducing Asian depend-
ency on the US dollar, contributing ...