The crisis in the eurozone will not damage or reverse the
growing impetus toward economic cooperation and integration in
Asia, experts agreed yesterday.
But events in Europe will force policymakers to think hard
about the implications of closer monetary cooperation, they
Warnings were sounded before the launch of the euro in 1999
that, by locking themselves together in monetary union and with
a single currency, European nations could set up fiscal strains
that would test or even destroy the union, they noted.
Fiscal policies must be closely aligned before
less flexible currency regimes are attempted, ADB president
Haruhiko Kuroda said at a press briefing.
The single European currency has been a great
achievement, but the current situation shows how challenging it
is to align fiscal policies to meet the demands of a
common currency, he said.
His warning was echoed by University of California economics
professor Barry Eichengreen, who suggested at a seminar that
the crisis in the euro will make everyone think very
carefully about the prerequisites for monetary integration in
But integration in Asia is far less advanced than in
Europe, Masahiro Kawai, dean of the Tokyo-based ADBI
Institute, said. There is a huge agenda of integration
initiatives that can be undertaken in Asia before the
region is ready for close monetary cooperation.
Kawais comments came on the same day that the ADB
published a landmark study, arguing that Asian economic
integration is ready for a major new advance now in the form of
a network of institutions for regional
Views differed over whether problems in Greece and other
European economies can be contained within the eurozone, or
whether they are likely to result in contagion via financial
markets that will spread to other parts of the world.
It is probable that the Greek crisis will be
dealt with appropriately and the crisis will be resolved
shortly, Kuroda told Emerging Markets. The
impact on Asia has been negligible so far and I think this will
continue to be so.
But Kuroda acknowledged at a briefing that we cannot
disregard the possibility of contagion spreading from
Europe to Asia and other regions of the world given the
globalisation of financial markets.
Harinder Kohli president and CEO of the
Washington-based Centennial Group, said that so far, financial
markets have discriminated between what is happening in the
euro area and the situation.
But should the Greek crisis spread to Spain and possibly
Italy also, then the world asa whole cannot be
unaffected, said Kohli, a former senior official of the