It looks at first like a textbook case of a Government official putting his foot in his mouth but it all hangs on whether we are talking five years or 50. You do not need to read this column to know that there has been a bit of an uproar about an interview that our financial secretary, Donald Tsang Yam-kuen, gave to a Singapore English language newspaper. It quoted him as suggesting that Hong Kong and Singapore should consider adopting a common currency and, most importantly, that he used the words 'we are thinking in terms of a horizon of five to seven years'. Not so, said the Hong Kong Government's news distributor, hurtling out a correction as quickly as it could. He was actually talking about the very long term and said that if it took Europe 50 years to set up a common currency it would take much longer in Asia. Now forget for a moment all the other noise about how Mr Tsang reportedly said he felt 'brave and courageous' about thinking the unthinkable and about how the subsequent correction said our Government 'has no intention whatsoever' of tinkering with the Hong Kong dollar's link to the US dollar. What counts is whether he said five to seven years or whether he said 50. Five to seven is foot in mouth. Fifty is the proper sort of long-term strategic thinking that a person in Mr Tsang's position is paid to do. So let's have the tape. You tape everything like this in Singapore, don't you? Out with it then. The reason it is so crucial a distinction is that Asian monetary union has already been proposed by several other senior Asian government officials, most notably Malaysian Prime Minister Mahathir Mohamad. In a world of instant communications, growing trade and falling barriers to capital flows, a system of multiple micro-currencies in Asia will be woefully archaic long before 50 years is up. It will subject us to the danger of repeated financial crises and increasingly hamper growth as we go forward. The solution that has presented itself to many people already is a common Asian currency like the newly established euro in Europe, probably anchored on the yen. Singapore and Hong Kong together is not enough. The idea is a non-starter if, that is, Mr Tsang did actually propose only this. The tape, please. But the big difficulty is that we do not have the prerequisites in place. You can start with things like the fact that the mainland would find it objectionable to abandon the yuan for a Japanese currency by any name and, without the mainland, currency union would be a tad difficult to achieve. Then you can take the opinion of most Asians that the Japanese have never properly apologised for World War II while Germany has done it unreservedly long ago, one reason the French do not object to a central bank in Germany. And this does not even touch financial obstacles such as existing wide disparities in currency performance, government fiscal positions, balance of payments differences and the immense reluctance of Asian governments everywhere to give up control of domestic interest rates. So a five- to seven-year target for currency union is simply out of the question. It is particularly so for us because, having just successfully withstood the biggest speculative attack of history on our currency link to the US dollar, we can do without rumours that our Government will abandon the link in just a few years time. But 50 years is another matter. It will take a very long time to bring everyone together and it is probably a good idea for someone to push us all into thinking about it now. That is why it is so regrettable that Mr Tsang's first attempt at doing it went off the rails so badly. We shall have to wait for the tape to see if he was himself responsible for it. His underlying purpose, however, was undoubtedly the right one.
