Feasibility and Implications of a Monetary Union in Southeast Asia

This study explores the readiness of seven ASEAN countries to adopt a common monetary policy and introduce a common currency. The suitability of the region as an Optimum Currency Area is estimated using an OCA Index developed in Bayoumi & Eichengreen (1997). This study finds that while the countries studied appear to be prepared to adopt a common monetary policy, there are still many opportunities to exploit policy independence in order to improve infrastructure and competitiveness prior to further integration.