Financial Secretary Donald Tsang Yam-kuen might have been expected to take a vow of silence on the issue of a common currency for Asia, after all the trouble it has got him into recently. But not a bit of it. Instead Mr Tsang intends to continue pushing the idea, however unrealistic it may seem. Perhaps he will be more careful what he says in future and not make the mistake of giving any more timetables. That was what got him into such hot water in his interview with the Straits Times last week. Mr Tsang said it was time to 'think the unthinkable' and that he felt 'brave and courageous' in doing so. He was even quoted as predicting that a link with Singapore could be put in place within 'five to seven years' as the first step to an Asia-wide currency. The resulting headlines provoked brief alarm in government that these remarks might be seen by the financial markets as evidence of an imminent intention to abandon the peg. A defensive statement lamely insisted Mr Tsang had been quoted out of context and was only talking about the long-term. But no attempt was made to deny that the Financial Secretary had advocated the adoption of a common currency. Instead Monetary Authority Chief Executive Joseph Yam Chi-kwong, who has previously floated the idea, reiterated the need to seriously consider it. All the signs are that he and Mr Tsang will continue to raise the issue whenever the opportunity arises, even if this leads to accusations they are day-dreaming about the distant future. 'Asia now embraces so many individual sovereign currencies that it is probably very vulnerable,' said Mr Tsang, in a part of the Straits Times interview which he has not disputed. Few places are more vulnerable than tiny Hong Kong. Even the world's fifth largest foreign reserves are no guarantee against attack, as shown by last year's assaults on the peg. Mr Tsang insists the Hong Kong dollar was not targeted over problems with the local economy. Rather it was because its small size, in international terms, made it a highly tempting target. He believes the answer may be a common currency. As Mr Yam said in a column on the Monetary Authority's Web site: 'If small open markets are vulnerable, consideration should be given in the longer term to building bigger markets.' Such a currency would also provide an easy way to drop the peg. Officials have recently become more open about the problems with the present system, which forces local interest rates to track those in the US. Mr Yam admitted this might delay economic recovery. Mr Tsang spoke of there being no 'perfect solution'. But there can be no question of replacing it with a floating exchange rate, as this would only make Hong Kong even more vulnerable to external pressure. Nor is it easy to change the level of the peg without encouraging speculators to attack again. That leaves switching to an Asia-wide currency as almost the only viable way of escaping the present peg. Hence the financial duo's enthusiasm for talking up the idea. They know that immense practical obstacles, from suspicion of Japan to the huge economic disparities within the region, mean it may take 50 years or never happen at all. Mr Yam calls it 'a very remote ideal'. But if they don't help start the ball rolling, the chances of it ever becoming a reality are even lower. Already it has become an issue that merits some discussion, which wasn't the case until recently. The two top officials clearly believe there are advantages for Hong Kong in pushing the idea of a common currency. And providing Mr Tsang can restrain himself from giving any more unrealistic timetables, it is unlikely to do any harm. Danny Gittings is a South China Morning Post Associate Editor
