Smartphone Apps Bury the Case for a Pan-Asian Currency
Unrealistic as it was technically, the idea of a pan-Asian currency always had some political support: Since 2005, the Japanese have published the exchange value of something called the Asian Monetary Unit, a precursor to what would one day become the region's equivalent of the euro. The debt crisis in southern Europe — and the threat it posed to the single currency in the early part of the last decade — ended that pipe dream.
Now there's a more modest goal: Keep money national, but allow it to jump borders effortlessly. This vision could start becoming a reality in three years and have a far-reaching impact on a continent expected to account for half of the world's consumption growth in the current decade.
That's a $10 trillion opportunity, according to McKinsey & Co. A big chunk of this additional consumption will be fulfilled by small and medium-sized businesses, and a lot of it will occur online. But credit cards and PayPal are expensive options for small merchants. And while Indonesian sellers can easily accept QR-code-based transfers from local digital banking or fintech apps, they can't do the same for Singapore banks' customers. National boundaries get in the way. As Ravi Menon, chief of the Monetary Authority of Singapore, said in a recent speech: “The current state of cross-border payments is not fit for the 21st century.”
Thankfully, an upgrade is at hand. From Singapore and Malaysia to Thailand, Indonesia and the Philippines, countries in Southeast Asia want a multilateral network of payments by 2025. Their customers already have access to mobile-phone apps for settling claims in real time, but these are restricted to the local market. The next step is to connect them via the so-called Nexus Scheme, which
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