WHAT DOES THE EURO MEAN FOR ASIA

The views expressed are strictly personal and should not be attributed to the IPS. The 1990s have been among the more turbulent decades for the international monetary system in the recent past. The virtual breakdown of the European Exchange Rate Mechanism (ERM) in 1992-93 was followed in 1994-95 by the Mexican peso crisis and the accompanying spillover effects to Argentina as well as Brazil (so-called " Tequila effect "). In July 1997, the Thai baht was devalued after having come under repeated speculative attacks since late 1996. The crisis quickly spread to the rest of East Asia (so-called " Tom-Yam effect "). As the five crisis-hit East Asian economies (viz. Indonesia, Korea, Malaysia, Thailand and, to a lesser extent, the Philippines) saw a single year capital reversal of about $105 billion between 1997 and 1998 (Table 1), the socio-political repercussions that the crisis has had on the East Asian economies have been calamitous (Gupta, et al., 1998) 1. Most policy-makers and businessmen in Asia have understandably been preoccupied with the ongoing regional crisis, and have not paid much attention to the 1999, the international monetary system experienced a truly momentous and historically unprecedented event (or more specifically, a key event in an ongoing process), with the introduction by selected EU economies of a common currency, known as the " euro "