Dr Uma Murthy

 

 

 

Dr Paul Anthony Maria Das

 

As global economic uncertainties continue to mount, Southeast Asia stands at a strategic crossroads. The recent surge in trade tensions, particularly those stemming from the United States’ (U.S.) tariff policies and restrictive trade measures, has reignited discussions across Association of Southeast Asian Nations (ASEAN) about the need for greater financial and monetary integration. One idea, long debated but never realised, has resurfaced with renewed urgency – the adoption of a single ASEAN currency.

The U.S. has increasingly adopted protectionist trade practices, disrupted global supply chains and raised the cost of doing business. The ongoing U.S.–China tariff war, for example, continues to unsettle ASEAN exporters, particularly in electronics, palm oil, and rubber.

According to the World Bank, the Southeast Asian region could lose an estimated US$13 billion annually due to ripple effects from trade fragmentation and tariff hikes.[1]

Currency volatility adds another layer of unpredictability. The Thai baht, Malaysian ringgit, and Indonesian rupiah have all experienced significant depreciation against the U.S. dollar over the past year, making imports more expensive and external debt burdens heavier.

A single regional currency could act as a buffer, shielding ASEAN economies from external shocks and speculative currency attacks.

The European Union’s adoption of the euro has created one of the largest and most stable currency unions in the world, bringing 19 countries under a unified monetary policy. While challenges remain — as seen during the Greek debt crisis — the benefits of the euro in promoting price stability, enhancing trade, and reducing transaction costs are undeniable.

Eurozone trade within member states rose by over 50% in the first decade of the euro’s introduction, according  to data from the European Central Bank.[2]

ASEAN already has some groundwork laid. The Chiang Mai Initiative Multilateralisation (CMIM), ASEAN+3 Macroeconomic Research Office (AMRO), and the ASEAN Economic Community (AEC) indicate that economic collaboration is not only feasible but already partially in motion.

Intra-ASEAN trade now accounts for more than 22% of total ASEAN trade, worth over US$800 billion annually, according to the ASEAN Statistical Brief.[3] Countries such as Malaysia, Singapore, Vietnam, and Thailand are increasingly interlinked in both production and consumption. Harmonising currency would eliminate foreign exchange costs, encourage regional investment, and boost economic resilience.

Moreover, the growing influence of China’s yuan, and the possible future expansion of BRICS’ financial infrastructure, present a challenge to ASEAN central banks which are still highly reliant on the US dollar. A single ASEAN currency could strengthen the bloc’s bargaining power in global negotiations and reduce overdependence on Western financial systems.

Critics rightly point out the challenges, such as differences in inflation rates, fiscal discipline, political structures, and financial market maturity. ASEAN is more diverse economically than the Eurozone, ranging from high-income Singapore to emerging economies like Laos and Myanmar.

But unity does not require uniformity. A staged implementation — beginning with a currency basket peg or a digital ASEAN currency for intra-bloc trade — could serve as realistic first steps. Digital tools such as QR-code payments and central bank digital currencies (CBDCs), already in use in Thailand, Singapore, and Malaysia, can fast-track integration.

The post-COVID-19 world is reshaping global economic priorities. With ongoing trade disruptions and geopolitical instability, ASEAN must ask itself whether continuing with fragmented currencies serves its future.

Now is the time for the region to boldly envision a future anchored in monetary unity. A single ASEAN currency is not just a dream — it could be the key to securing long-term stability, growth, and independence in an increasingly uncertain world.

Dr Uma Murthy and Dr Paul Anthony Maria Das are Lecturers at the School of Accounting and Finance, Taylor’s Business School, Faculty of Business and Law, Taylor’s University. Taylor’s Business School is the leading private business school in Southeast Asia for Business and Management Studies based on the 2025 QS World University Rankings by Subject and has received the Association to Advance Collegiate Schools of Business (AACSB) accreditation.

[1] https://www.imf.org/en/Blogs/Articles/2025/03/25/southeast-asias-economies-can-gain-most-by-packaging-ambitious-reforms

[2] https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op283~a2ff6f5481.en.pdf

[3] https://www.aseanstats.org/wp-content/uploads/2024/05/ASB-202405-03.pdf