What was the Asian Currency Unit (ACU)?
The Asian Monetary Unit (ACU), also known as the Asian Monetary Unit (AMU), was a proposed basket of Asian currencies, similar to the European Monetary Unit, which was the forerunner of the common euro currency. Today, the ACU remains an academic project with no real traction among Asian governments, nor much popular support among its citizens.
- The Asian Monetary Unit (ACU) was a proposal led by the Asian Development Bank aimed at fostering a common currency region in Asia.
- The goal of the ACU was to promote greater free trade and financial flows between Asian countries and to loosen the region’s dependence on the US dollar.
- While it is still being explored, the ACU has yet to find real traction among Asian governments.
Understanding the Asian Currency Unit (ACU)
The goal of the ACU was to promote greater free trade and financial flows between Asian countries and to loosen the region’s dependence on the US dollar. The Asian Development Bank (ADB) is responsible for exploring the feasibility and construction of the currency basket together with the Research Institute of Economics, Trade and Industry of Japan (RIETI).
The ACU is a proposed currency basket for the currencies of Asian countries that would include China, Japan, South Korea, Indonesia, Malaysia, and Singapore. In particular, it would serve as a common currency basket made up of 13 East Asian currencies, such as ASEAN 10 plus Japan, China, and South Korea.
ASEAN (Association of Southeast Asian Nations) is a regional organization of 10 Southeast Asian and Pacific Rim countries whose governments collaborate to promote socio-cultural, economic and political advancement in the region. Other proposals have called for the ACU to also include Hong Kong and New Zealand.
The logic of ACU was that it could be used as a means to improve the stability of the domestic exchange rate if regional central banks begin to stabilize their respective currencies to the unit of ACU, thus helping to reduce the possibility of regional competitive devaluations, where a country strategically devalues its currency in response to another country’s own devaluation.
The notion of stabilization through an internal basket similar to Europe’s Exchange Rate Mechanism (ERM) is different from stabilization through an external unit, which would require the ACU, in turn, to be linked in some way to external currencies. like the US dollar or euro, or some external basket.
There have been a number of financial instruments that use baskets of Asian currencies, but these are individually constructed and are not sponsored or used as a medium of exchange in the countries represented. However, there were obstacles that prevented the creation of an official Asian currency unit, including serious misalignments between the various regional currencies that would have been involved.
The proposed ACU basket includes 13 coins:
|ACU Component Coins|
|porcelain||Chinese yuan (renminbi)|
|South Korea||South Korean won|