Libmonster ID: PH-1257

Author(s) of the publication: B. Arapova →

Source: World Economy and International Relations. - No. 1. - 31 January. - 2015. - P. 40-51. →

With the growing interdependence of economies and markets, States are increasingly striving to protect their national financial systems from external shocks, in particular through regional initiatives aimed at improving financial stability. The article is devoted to integration trends in the currency sphere of East Asian states. Based on the author's analysis, the criteria for forming the structure of a multi-currency basket that is most conducive to improving regional financial stability are determined; a method for calculating the value of the Asian Currency Unit (ACU) is proposed.

Keywords: Asian currency unit, currency integration, financial regionalism, multi-currency basket, ASEAN, ASEAN+3, East Asia. The article was received on 12.05.2014.

A joint statement following the 16th ASEAN+3 + 1 Meeting of Finance Ministers and Central Bank Governors, held in May 2013, expressed the intention to develop financial cooperation among the countries of the region. Representatives of the participating countries recognized that " the use of local currencies in trade, investment and capital transactions, as well as reducing the volatility of the import/export of capital, will help the region to withstand external risks "[1]. Based on this, it was decided to continue working together to enhance the use of local currencies under the Chiang Mai Initiative 2 and take measures aimed at improving regional financial stability.

Today, monetary integration is one of the most important areas of financial integration of the ASEAN countries+3. It is based on the idea of introducing an Asian Currency Unit (ACU), put forward in 2006 by the Research Institute of Economy, Trade and Industry (RIETI). The ACU is designed to become the Asian equivalent of the ECU, which can later develop into the Asian equivalent of the euro in Asia. At the time of the concept's development, 16 ASEAN+6 countries agreed to use the new currency unit in the regional settlement system, but the de facto ACU has not yet been introduced. This problem is periodically raised during high-level meetings, and many international organizations and institutions (RIETI, ADBI3, etc.) conduct large-scale research in search of the optimal structure of the ACU currency basket. Nevertheless, there are still many obstacles, both purely economic and political, on the way to full-fledged monetary integration of the ASEAN+3 countries. The question of the composition of the multi-currency basket also remains openACU and the formation of its optimal structure, which is most conducive to improving regional financial stability and reducing the exposure of the region's countries to negative external influences.

ON THE HISTORY OF CURRENCY INTEGRATION

The development of financial cooperation received a powerful boost after the 1997-1998 Asian financial crisis, when the East Asian states fully realized the high vulnerability of their financial markets and their exposure to negative external influences (the" epidemic effect") due to the growing dependence

Ekaterina Yakovlevna ARAPOVA, Candidate of Economic Sciences, Head of Department, MGIMO (U) of the Ministry of Foreign Affairs of the Russian Federation, 76 Vernadsky Ave., Moscow, 119454, Russian Federation (arapova_katrin@mail.ru).

1 The ASEAN+3 Association includes 10 member countries of the Association of Southeast Asian Nations (Singapore, Malaysia, Thailand, the Philippines, Indonesia, Brunei, Laos, Myanmar, Cambodia, and Vietnam), as well as three Northeast Asian States (China, Japan, and the Republic of Korea).

2 Chiang Mai Initiative 2000-an agreement on mutual support of national currencies of Southeast Asian countries, which laid the foundation for developing cooperation aimed at improving financial stability in the region. In fact, it is a swap loan agreement that allows a country whose currency has been attacked to receive foreign currency for conducting interventions secured by government securities.

ADBI is An Independent Institute of the Asian Development Bank.

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depending on the global market situation. The crisis also exposed the inability of international organizations, in particular the IMF, to respond to emerging threats in a timely manner. On the one hand, the IMF was unable to develop an effective anti - crisis action program in a short time, and on the other hand, it did not have sufficient financial resources to provide the liquidity needed for countries in crisis situations.

After the Asian financial crisis, the initial reluctance of ASEAN to move closer to non-Asian countries in the Asia-Pacific region sharply increased. The crisis actually became the main impetus for the formation of an integration association consisting exclusively of "Asian" countries and a shift in emphasis towards strengthening financial stability.

There was a desire to limit the integration association to the East Asian states, including only China, the Republic of Korea and Japan in addition to the ten ASEAN countries. In 1997, this format of cooperation was called "ASEAN+3". At the same time, Japan proposed the creation of the Asian Monetary Fund (AVF) with an initial authorized capital of $ 100 billion [2, p. 95], which was designed to provide the region's states with the necessary financial resources in case of liquidity problems that threaten the stability of the regional financial system. It was assumed that its shareholders will be 10 states: China, Hong Kong, Japan, the Republic of Korea, Australia, Indonesia, Malaysia, Singapore, Thailand and the Philippines. The Fund was created as a component of a new global financial architecture, an alternative to the Bretton Woods system.

The main goal of the creation of the AWF, like most existing international financial organizations, was to achieve global economic stability and sustainable growth. At the same time, it was assumed that the principles of functioning of the fund would have important differences. In particular, the provision of financial resources within the framework of the AWF was not conditioned by the need for a specific economic policy of its participants.

The practical implementation of the project was postponed largely for political reasons and due to opposition from some Western countries (especially the United States), as well as major international financial institutions, including the IMF. Opponents of the idea of creating an AVF claimed that the formation of a new structure was unjustified, referring to the moral risk4 and duplication of functions of the IMF [2, p.96]. The United States and the International Monetary Fund, in which they have the largest share of votes (almost 17%), were afraid of losing their influence in the region, as they were deprived of the opportunity to participate in decisions on the allocation of funds and the development of "anti-crisis programs".

Today, the issue of reforming existing international financial institutions and creating a new global financial architecture in order to improve global financial stability is one of the main items on the agenda of all interstate forums (G-20, BRICS, APEC). As a result of discussions on these issues at the G-20 summits in 2011, the New Arrangements to Borrow (NAB) came into force. The amount of funds allocated increased from 34 to 369.9 billion. Special Drawing Rights (SDR), and the number of countries that have access to them has been increased from 26 to 40 [3]. Particular attention is paid to the creation of alternative financial structures designed to strengthen global financial stability. In particular, the BRICS countries decided to create their own Development Bank [4].

The 1997-1998 Asian financial crisis has raised the question of the failure of the policies pursued by international financial institutions and the need to reform the global financial system. However, alternative concepts were not very viable. So, despite the fact that Japan's idea of creating an AVF was initially supported by the majority of East Asian states, under pressure from the United States and the IMF, it gradually faded away. As a result, Asian countries were forced to look for additional mechanisms to maintain regional financial stability.

Today, the development of financial cooperation in the ASEAN+3 format is reflected in a number of initiatives. Among them are the Chiang Mai initiative and the idea of creating an Office for Macroeconomic Stability (in fact, continuing the ideas of the AWF). It was meant that the development of regional bond markets and the creation of bond funds, as well as the introduction of the Asian currency exchange rate, will be implemented in the future.

4 Moral hazard refers to a situation where lenders ignore the precarious situation of the borrower and supply loan capital in the hope of obtaining high incomes and assistance from international financial institutions in the event of a crisis.

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ACU units can become the first stage of forming your own currency union.

The Chiang Mai Initiative is a fairly effective mechanism for ensuring the stability of the financial systems of the ASEAN+3 countries. The amount of financial resources accumulated within its framework increased from $ 85 billion at the time of its creation in 2000 to $ 240 billion in 2013. The decision to increase them was made in May 2012 during the 15th meeting of Finance Ministers and central Bank governors of the ASEAN+3 states [5]. Significant progress has been made in implementing the Bond Markets Development Initiative. A New Roadmap+ was adopted, which identified key areas of action, including the establishment of the ASEAN+3 Bond Markets Forum and the implementation of a number of projects to improve financial infrastructure.

Thanks to the success of the Chiang Mai initiative, private entities are now also involved in the scheme of providing loans in exchange for government securities. Such mechanisms are implemented at the bilateral level, where the main party is Japan, which supports its TNCs in their investment activity in the markets of the countries of the region. In 2011, an agreement was reached with Thailand to open a credit line secured by Japanese government bonds for Japanese companies operating in the country. In 2013, a similar agreement was concluded with the monetary authorities of Singapore [6]. At the same time, loans to Japanese corporations operating in Singapore will be issued in the local currency - Singapore dollars. In fact, Japanese government bonds will become collateral for the loan funds provided. This will allow, on the one hand, to provide Japanese corporations with financial resources in the event of a lack of liquidity, and on the other - to increase their direct investment in the Singapore economy.

As part of efforts to strengthen regional financial stability, the concept of the Asian Currency Unit (ACU) was developed in 2006. It is designed to strengthen the stability of national currency exchange rates and reduce the dependence of the region's economies on the world's leading reserve currencies, primarily the US dollar. The implementation of the export-oriented development strategy, which has been followed by many East Asian countries for a long period of time, and the high savings rate have led to the accumulation of significant gold and foreign exchange reserves. Settlement of trade and financial transactions using the new currency unit should contribute to the redistribution of savings within the region and strengthen immunity from external shocks.

BARRIERS TO CURRENCY INTEGRATION

In accordance with the theory of "optimal currency areas" put forward by the Canadian economist R. Mundell [7], the following conditions are necessary for the successful development of currency integration [8, p. 35]:

- openness to the member countries of a potential integration association;

- integration of markets for goods, services, factors of production and financial instruments;

- "symmetry" of the impact of external shocks on Member States 5;

- similarity of preferences in choosing the optimal ratio between output and inflation;

- readiness to coordinate macroeconomic policies, primarily fiscal ones.

Of the five conditions listed above, only the first two are more or less met in the 13 East Asian States under review. Due to the development of integration within the framework of ASEAN and the creation of free trade zones in the ASEAN+1 format (ASEAN-Japan, ASEAN-China, ASEAN-Republic of Korea), the share of mutual trade in the trade turnover of member countries of integration associations is growing. In 2012, domestic trade in the total volume of ASEAN countries increased to 24.3%, compared to 22% in 2000. At the same time, China's trade turnover with the ASEAN countries grew at a record pace - its share in the country's total trade turnover increased from 4.3% to 12.9% during the period under review. Significantly more modest indicators

5 By" symmetry " of the impact of external shocks, Mundell meant the occurrence of identical macroeconomic consequences in the countries of the currency zone. If external factors cause the macroeconomic indicators of the zone's member countries to change unidirectionally (for example, unemployment and inflation are rising everywhere while demand is falling), it is possible to pursue a single monetary policy, which ensures the viability of the currency zone itself.

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Republic of Korea - 3.9% and 5.3%, respectively [9]. An exception is Japan, where the share of trade turnover with the ASEAN countries decreased from 15.3% in 2000 to 10.6% in 2012 [9], but the share of direct foreign investment in them increased significantly (from 2.5% to 13.2%).

Significant progress has been made in facilitating the movement of capital and labor within ASEAN+3. Nevertheless, it is too early to talk about deep integration of financial markets. There has not yet been a noticeable convergence in the dynamics of interest rates, income on securities, or the size of financial markets. This also applies to the nature of regulation of operations in financial markets. We can talk not so much about the development of regional integration, but about the growing presence of counterparties from leading ASEAN countries (such as Singapore or Japan) in the financial markets of other East Asian states. This is due to the effectiveness of the macroeconomic policies of the states themselves, rather than initiatives to strengthen financial integration.

Significant differences in the level of economic development and the choice of foreign economic strategy of East Asian countries hinder currency integration even at its initial stages. One of the main obstacles directly in the currency sphere is differences in the modes of forming exchange rates. Today, out of the 16 ASEAN+6 + 6 States, only one (Brunei) maintains a fixed exchange rate regime. Eight countries have transition regimes, and seven have introduced floating exchange rates [10, pp. 5-6] (Table 1).

Under the conditions of a fixed exchange rate regime and at the same time striving to increase capital mobility, states are limited in choosing the course of monetary policy, which hinders the development of a unified monetary policy and the expansion of integration processes in the currency sphere. They face the so-called monetary policy trilemma 7. In turn, with a floating exchange rate, the risk of instability of the national currency increases, and the country's economy becomes more dependent on external influences. In this situation, it makes no sense to create a regional currency unit as a tool for improving the stability of the region's financial system.

CRITERIA FOR DETERMINING THE COMPOSITION OF THE CURRENCY BASKET

When the concept of the Asian Currency Unit was introduced in 2006, the multi-currency basket included the currencies of the ASEAN+3 countries-the core of financial integration in the region. But the question of the optimal basket structure is still open8. The question of including the Hong Kong and Taiwan dollars in its composition also remains open.

We will try to compare alternative options for the structure of the ACU multi-currency basket and identify the one that would most contribute to strengthening the stability of national currencies and would correspond to the strategic interests of the participating countries. There are five main variants of the multi-currency basket of the Asian currency unit:

Option 1: Currencies of the 13 ASEAN+3 countries;

Option 2: Currencies of the 8 ASEAN countries-5 9+3 (China, Japan, Republic of Korea);

Option 3: Currencies of the 14 ASEAN countries+ +3+India;

Option 4: Currencies of 9 ASEAN-5+3 countries (China, Japan, Republic of Korea) + India;

Option 5: Currencies of the 16 ASEAN+6 countries.

Option 1 represents the initial composition of the currency basket at the time of the creation of the Asian Currency Unit concept. It includes the currencies of 13 countries, including China, Japan and the Republic of Korea - leaders in terms of GDP and the scale of foreign trade operations. Along with them, India also occupies a leading position in these indicators. It actively develops integration processes

6 In addition to the previously listed 10 countries (Singapore, Malaysia, Thailand, the Philippines, Indonesia, Brunei, Laos, Myanmar, Cambodia, Vietnam), ASEAN+6 includes China, Japan, the Republic of Korea, New Zealand, India and Australia.

7 The concept of the "monetary policy trilemma"was introduced by M. Obstfeld and A. Taylor. It means that it is impossible to combine its three important components: the regime of a fixed exchange rate, the free movement of capital, and the independence of monetary policy itself.

8 In particular, experts from the Research Institute of Economy, Trade and Industry of Japan (RIETI) are considering two options for the currency basket: with the inclusion of the currencies of 13 countries (ASEAN+3) and an expanded version taking into account the currencies of India, Australia and New Zealand.

9 ASEAN-5 includes Indonesia, Malaysia, Singapore, Thailand and the Philippines.

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Table 1. National currency exchange rate formation regimes in the ASEAN+6 countries as of October 2013

Exchange rate regime

A country

Fixed exchange rate binding / Floating exchange rate target

Fixed exchange rate mode

Currency management or Currency Board mode

Brunei

Singapore dollar

Transient modes

Stable exchange rate mode

Cambodia, Vietnam,

US dollar

Laos

euro

Other exchange rate adjustment modes

Singapore,

euro

China,

target money supply indicator

Indonesia

target inflation rate (4.5±1% for 2012-2014)

Other managed exchange rate modes

Malaysia, Myanmar

monetary policy targets

Floating exchange rate mode

Floating exchange rate

Republic of Korea

target inflation rate (at the level of 3±1% for 2010-2012)

New Zealand

target inflation rate (at the level of 2±1%)

Philippines,

target inflation rate (at the level of 4±1% for 2011-2014)

Thailand,

target inflation rate (at the level of 0.5-3% on a quarterly basis)

India

monetary policy targets

Free floating exchange rate

Australia, Japan

inflation target (at the level of 2-3%) inflation target (at the level of 0-2%)

Compiled by the author on the basis of: [10, pp. 5-6] and [11, p. 6] in accordance with the IMF classification [12, p. 4].

with the countries of East Asia, primarily within the framework of the Free Trade Agreement with the ASEAN countries that entered into force on January 1, 2010, and thereby expands and strengthens its own positions in the region. This is why it makes sense to include the Indian rupee in one of the alternative multi-currency basket options (option 3).

Due to the significant gap in the levels of economic development of the ASEAN countries, historically, integration processes within the Association developed in two stages: first, they covered five relatively more developed countries (Indonesia, Malaysia, Singapore, Thailand, and the Philippines), and then spread to all other countries of the grouping. This is why variants 2 and 4 are singled out as independent options.

In accordance with the concept of the future East Asian Community, at the first stage it can be based on the ASEAN+3 format, but later its membership will expand to 16 countries participating in the East Asian Summit (ASEAN+6). This explains the allocation of the fifth variant of the multicurrency basket as an independent object of research.

What criteria (macroeconomic indicators) should be the basis for calculating the share of each currency in the multi-currency basket? To answer this question, it makes sense to refer to the existing practice. Thus, the European currency unit ECU, which preceded the euro, was calculated based on three indicators: national income, share in trade turnover, and the degree of participation in mutual currency support of those countries whose currencies were included in the multi-currency basket.

According to the methodology proposed by specialists of the Institute for Economic, Trade and Industry Research of Japan (RIETI),

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The calculation of the structure of the A CU multi-currency basket should be based on GDP, export volumes, and foreign direct investment sent abroad by the countries of the integration grouping [13]. If the first two indicators are traditionally used to calculate the structure of a multi-currency basket of regional monetary units, then such a criterion as external FDI is a distinctive feature of ACU. This is primarily beneficial for Japan, which, as noted above, is significantly ahead of other countries in the region in terms of outward FDI. Accordingly, the use of this criterion can significantly increase the weight of the yen in the structure of the multi-currency basket.

According to the author of the article, it is most appropriate to use the following three criteria::

1) the country's share in the total GDP of those countries whose currencies are included in the multi-currency basket;

2) the share of the country's foreign trade turnover in the total trade turnover of the participating countries;

3) the country's share of FDI in the total volume of direct investment sent abroad by participating countries.

In addition to them, the author introduced another criterion as part of his own calculation of the ACU multi-currency basket:

4) the share of the country's international gold and foreign exchange reserves in the total reserves of the studied countries.

The need to include this indicator in the calculation system is explained by the fact that international reserves are one of the main instruments for regulating the exchange rates of national currencies by central banks. Accumulation of significant gold and foreign exchange reserves is a characteristic feature of Asian economies, the result of their long-term export-oriented development strategy and high savings rates. The main thing is that significant international reserves can be considered as a guarantee of ensuring the stability of the ACU exchange rate, which will be confirmed in the future by the results of calculations.

It should also be taken into account that the multi-currency basket can be calculated both on the basis of one of the above criteria and on the basis of their arithmetic mean (Table 2). The results of our calculations show that the use of the indicator of foreign direct investment abroad is beneficial only for Japan and Malaysia, since in comparison with other countries in the region, investors are more weighty.

In turn, for China and the Republic of Korea, it is most advantageous to calculate the structure of the multi-currency basket by its share in regional GDP. In this case, the weight of their national currencies in the basket will be significantly higher than when calculating the value of foreign trade turnover or FDI. At the same time, for the most developed ASEAN countries - Singapore, Thailand, and Indonesia - the indicator of trade turnover is preferred as a criterion. It can significantly increase the role of these countries in the formation of a multi-currency basket of East Asian countries.

The inclusion of the indicator of international reserves in the calculation methodology significantly increases the share of the Chinese yuan in the structure of the multi-currency basket. At the same time, the significance of the participation of all other ASEAN+6 states is decreasing.

OPTIMAL CURRENCY BASKET STRUCTURE

The next step in the study is to identify such a variant of the multi-currency basket structure that can provide the greatest stability of the Asian currency unit. To this end, the level of fluctuations in the exchange rates of the national currencies of the ASEAN+6 countries was estimated and the aggregate coefficient of variation (ACV)10 was determined for each scenario of the formation of a multi-currency basket.

The coefficient of variation of the national currency of an ASEAN+6 member country is calculated using the formula:

- standard deviation of the actual exchange rate of the national currency of the country from the average value;

- the arithmetic mean of the national currency rate of the respective country.

In the period from January 2009 to February 2014, the most volatile currencies were those of India, Australia and New Zealand, and among the ASEAN countries - Myanmar (Table 3). Among the currencies of the North-East Asian countries, the Chinese yuan remained the most stable. The maximum coefficient of variation for the currencies of the ASEAN+3 countries (excluding Myanmar) was observed in the Japanese yen,

10 The concept of "aggregated coefficient of variation" is introduced by the author.

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Table 2. Alternative options for the structure of the ACU multicurrency basket, %

By GDP

By turnover

By FDI

Arithmetic mean of 3 indicators

By reserves

Arithmetic mean of 4 indicators

ASEAN+3

Brunei

0.098

0.188

0.003

0.096

0.059

0.087

Vietnam

0.899

2.535

0.400

1.278

0.440

1.068

Indonesia

3.170

4.172

1.805

3.049

1.942

2.772

Cambodia

0.082

0.211

0.010

0.101

0.085

0.097

Laos

0.053

0.056

0.000

0.036

0.022

0.033

Malaysia

1.761

4.661

5.698

4.040

2.405

3.631

Myanmar

0.319

0.199

0.000

0.173

0.127

0.161

Singapore

1.598

8.664

7.684

5.982

4.577

5.631

Thailand

2.114

5.260

3.966

3.780

3.124

3.616

Philippines

1.445

1.296

0.614

1.119

1.442

1.200

China

47.499

42.508

28.039

39.349

58.309

44.089

Japan

34.437

18.515

40.801

31.251

21.827

28.895

Republic of Korea

6.526

11.735

10.979

9.747

5.641

8.720

Total

100

ASEAN-5+3

Indonesia

3.216

4.309

1.813

3.113

1.956

2.824

Malaysia

1.787

4.815

5.722

4.108

2.423

3.686

Singapore

1.621

8.949

7.716

6.095

4.611

5.724

Thailand

2.146

5.433

3.982

3.854

3.147

3.677

Philippines

1.467

1.339

0.617

1.141

1.453

1.219

China

48.198

43.908

28.156

40.087

58.739

44.750

Japan

34.944

19.125

40.970

31.680

21.989

29.257

Republic of Korea

6.622

12.121

11.025

9.923

5.683

8.863

Total

100

ASEAN+3+India

Brunei

0.089

0.173

0.003

0.088

0.056

0.080

Vietnam

0.812

2.333

0.388

1.178

0.419

0.988

Indonesia

2.865

3.840

1.755

2.820

1.846

2.577

Cambodia

0.074

0.194

0.010

0.093

0.081

0.090

Laos

0.048

0.052

0.000

0.033

0.021

0.030

Malaysia

1.591

4.290

5.540

3.807

2.287

3.427

Myanmar

0.289

0.183

0.000

0.157

0.120

0.148

Singapore

1.444

7.975

7.471

5.630

4.352

5.310

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Thailand

1.911

4.841

3.855

3.536

2.970

3.394

Philippines

1.306

1.193

0.597

1.032

1.371

1.117

China

42.930

39.125

27.260

36.439

55.442

41.189

Japan

31.125

17.042

39.667

29.278

20.754

27.147

Republic of Korea

5.898

10.801

10.674

9.125

5.364

8.184

India

9.618

7.958

2.778

6.785

4.917

6.318

Total

100

ASEAN-5+3+India

Indonesia

2.903

3.956

1.762

2.874

1.859

2.620

Malaysia

1.612

4.420

5.562

3.865

2.303

3.474

Singapore

1.463

8.216

7.501

5.726

4.383

5.391

Thailand

1.936

4.988

3.871

3.598

2.991

3.447

Philippines

1.324

1.229

0.600

1.051

1.381

1.133

China

43.501

40.308

27.370

37.060

55.831

41.753

Japan

31.538

17.557

39.827

29.641

20.900

27.456

Republic of Korea

5.977

11.127

10.717

9.274

5.401

8.306

India

9.745

8.199

2.789

6.911

4.951

6.421

Total

100

ASEAN+6

Brunei

0.081

0.163

0.003

0.082

0.056

0.076

Vietnam

0.746

2.201

0.369

1.105

0.414

0.932

Indonesia

2.630

3.623

1.668

2.640

1.826

2.437

Cambodia

0.068

0.183

0.010

0.087

0.080

0.085

Laos

0.044

0.049

0.000

0.031

0.021

0.028

Malaysia

1.461

4.048

5.265

3.591

2.262

3.259

Myanmar

0.265

0.172

0.000

0.146

0.119

0.139

Singapore

1.326

7.523

7.100

5.316

4.305

5.063

Thailand

1.754

4.567

3.664

3.329

2.938

3.231

Philippines

1.199

1.126

0.568

0.964

1.357

1.062

China

39.408

36.911

25.907

34.075

54.843

39.267

Japan

28.571

16.078

37.698

27.449

20.530

25.719

Republic of Korea

5.415

10.190

10.144

8.583

5.306

7.764

India

8.828

7.508

2.640

6.326

4.864

5.960

Australia

7.390

4.941

4.965

5.765

0.796

4.523

New Zealand

0.814

0.718

0.511

0.285

0.454

Total

100

Calculated by the author based on World Bank data. IMF Statistic Database [14]. UNCTAD Stat Database [15]. [16]. IMF World Economic Outlook Statistical Database [17] for 2012.

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Table 3. The level of fluctuations in the exchange rates of national currencies of the ASEAN+6 countries, January 2009-February 2014.

A country

Coefficient of variation (Vi)1

Country Rank

Brunei

0.062

Vietnam

0.070

Indonesia

0.092

Cambodia

0.017

Laos

0.028

Malaysia

0.055

Myanmar

0.767

Singapore

0.063

Thailand

0.049

Philippines

0.049

China

0.042

Japan

0.092

Republic of Korea

0.064

India

0.105

Australia

0.111

New Zealand

0.106

1 The calculation was based on the average monthly exchange rates of national currencies for the period from January 2009 to February 2014 inclusive. Due to the lack of statistical data, the calculation of the coefficient of variation for Cambodia and Laos was based on average annual levels.

Calculated by the author on the basis of data from [18] and [19].

This is primarily due to the effect of the floating exchange rate regime.

The aggregate coefficient of variation for alternative variants of the multi-currency basket ACU is calculated using the formula:

where

Vagr-aggregated coefficient of variation, %;

Vi - coefficient of variation of the exchange rate of the national currency included in the currency basket;

ai - the share of the national currency of the corresponding country in the structure of the currency basket, %;

n is the number of countries whose currencies are included in the currency basket in each of the studied variants.

The results of calculations of the aggregate coefficient of variation indicate that the use of the indicator of foreign trade turnover as a criterion for determining the structure of the multi-currency basket contributes to ensuring the stability of the ACU exchange rate (Table 4). The use of the indicator of international reserves is even more effective. For each of the above scenarios, the aggregate coefficient of variation when calculating the country's share in international reserves is 4.1 - 9.4 percentage points lower than the share in foreign trade turnover. At the same time, the gap between the ACV values calculated from the arithmetic mean of three and four indicators, respectively, varies in the range from 2.7 to 3.5 percentage points in favor of the latter option. The larger the number of currencies included in the basket, the larger the gap.

In addition, it would make sense to initially include the currencies of only the five most developed ASEAN countries and the three North-East Asian countries in the ACU basket under Option 2. This option has some advantages, since, firstly, it provides maximum stability of the ACU exchange rate (the aggregated coefficient of variation here has the lowest values), and secondly, it implies a significant reduction in the share of the highly volatile Japanese yen, which means that it also contributes to increasing the stability of the ACU. As already noted, Japan is the leader in ASEAN in terms of the coefficient of exchange rate variation-5+3, and in ASEAN+3 it is second only to Myanmar. It is obvious that the ASEAN-5+3 option may cause dissatisfaction on the part of Japan, which is not going to give up its position as a regional leader and a locomotive of integration processes.

* * *

The key conclusions of the analysis are as follows.

1. The greatest stability of the exchange rate of the Asian currency unit can be ensured if eight countries of the region are included in the multi-currency basket in the ASEAN-5+3 format.

2. The inclusion of India, Australia and New Zealand in the multi - currency basket will significantly reduce the stability of the ACU and, accordingly, negate the main goal of its introduction-improving regional financial stability.

3. To reduce the sharpness of contradictions in determining the specific weight of each currency in the ACU multi-currency basket, it makes sense to use the arithmetic mean of the country's share in the total GDP/national income, foreign trade turnover and foreign direct investment in the region as a basic criterion. In comparison with calculations only on GDP or only on trade turnover, in this case, on the one hand, it decreases

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Table 4. Calculation of aggregate coefficients of variation (ACV) for alternative scenarios of the ACU multicurrency basket

Variants

Calculation criteria

Aggregated coefficient of variation (ACV)

Option 1: ASEAN+3