World Bulletin / News Desk
A monetary union between New Zealand and Australia is not a practical option given the political and economic differences between the two countries, a joint government study said today.
A draft report prepared by officials from the two South Pacific economies said the costs of a monetary union, with a common currency and monetary policies, outweighed the benefits.
“They imply a loss of autonomy over monetary policy and exchange rate flexibility, which are important tools for macroeconomic stability,” the report said.
“Tying New Zealand’s fortunes to Australia’s currency would result in monetary policy being driven by Australian conditions, with decisions made by the Reserve Bank of Australia.”
Australia’s economy is around seven times larger than New Zealand, and central banks in the two countries have pursued different monetary policies.
New Zealand’s benchmark cash rate, which has been on hold at a record low for 18 months, is currently 100 basis points below Australia’s, which the RBA has cut by 125 basis points since last November.
The New Zealand dollar and the Australian dollar are two of the most freely traded commodity currencies, and often move in unison.
It said some degree of political union would be needed to make a monetary union effective, which was unlikely, and there was little popular support for such integration.
The two countries have one of the longest lasting and most developed free trade agreements, Closer Economic Relations (CER), which came into force in 1983.
It provides for free trade of goods and services between the two, freedom of travel and the right to work, common rules in such areas as government procurement, and food standards.
Nearly half a million New Zealanders live and work in Australia, with record numbers having migrated in recent numbers to take advantage of Australia’s mining boom.
The report suggests the two governments need to do further work to tackle the double taxation of investments, as well as look at common regulation of services, and reducing compliance costs for local shipping and air services.
It also suggested the two countries look to link the CER agreement to other trade deals.
Experts state that the crisis poses risks to the region, which is significant for oil production and exports in the world.
Federal Reserve removes word 'patient;' interest rate increase expected within months. Yellen says timing of rate rise 'not decided,' but will come anytime after April; holds current rates at 0 to 0.25 pct.
Many emerging-market currencies have fallen against the dollar in recent weeks
Anticipated Federal Reserve interest rate hikes making dollar strong against most emerging market currencies, Deputy Prime Minister Ali Babacan says.
European Statistical Agency says slight decline fuelled by drop in production of durable consumer goods.
EU will use all its foreign policy instruments to establish strategic energy partnerships with producing and transit countries.
Dollar strength and waning investor confidence are driving the lira lower
Greece has already received two bailouts totalling 240 billion euros but fellow euro zone member Ireland said last week that it would have to negotiate a third programme.
The Ukraine crisis has tested the loyalties of Bulgaria, a Balkan country with historical ties to Moscow and heavily dependent on Russian energy supplies.
Syria expels three United Nations aid workers hindering aid development in the country
Russia has overcome a "psychological barrier" and is ready to deepen its economic ties with China, Deputy Prime MinisterArkady Dvorkovich said
With Chancellor Angela Merkel's right-left coalition plus the opposition Greens, it was the biggest majority for any euro zone rescue package so far in the 631-seat chamber.
The agreement commits Tanzania, Kenya, Uganda, Rwanda and Burundi to cooperate with the United States in customs issues, ease red tape at borders, reduce customs wait times and harmonize trade standards.
Sri Lankan President Maithripala Sirisena has unnerved China with his re-examination of certain projects that Chinahas invested in, including a $1.5 billion "port city" project in Colombo.
EU energy chief Maros Sefcovic invited Russian Energy Minister Alexander Novak and his Ukrainian counterpart Volodymyr Demchyshyn for talks
Gazprom and Ukrainian state energy firm Naftogaz have accused each other of not sticking to agreements on gas supplies.