(DP 1999-01) Could a Common Currency Have Prevented the Asian Crisis?

Abstract

Recently currency instability and its economic and social consequences prompt the question whether and to what extent a common currency could have served to prevent or meliorate the Asian crisis. This paper examines the advantages and costs of such a proposal, using the experience and institutions of European monetary union as a starting point. It concludes that while the technical economic obstacles are not insurmountable, the political and social factors presupposed in a union are more important in explaining the region’s lukewarm reception of the proposal.