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.
Turkish parliament has already ratified the deal on construction of ‘TurkStream’ natural gas pipeline
The September rate was revised to 9.9 percent from the 10 percent first given last month.
Many analysts had expected the producers' cartel to fail to reach a deal as major players like Iran, Iraq and Saudi Arabia remained divided ahead of the meeting.
The report, which collects views of economists, business contacts and others in the 12 Federal Reserve districts in preparation for the monetary policy meeting next month, noted improved retail sales and home construction in most regions.
If the cartel does not reach a deal to cut output, prices could fall below $40 a barrel
European air travel giant Lufthansa has been battling its own pilots over pay and conditions for more than two years.
Failure to get an accord on Wednesday could send oil prices tumbling and deal a further blow to the credibility of the 56-year-old Organization of the Petroleum Exporting Countries.
Around midday, shares in Italian lenders Unicredit and Banco Popolare were down 4 percent compared with Friday's closing levels.
Officials on Friday's said the tie-up between the Hong Kong and Shenzhen markets will start on December 5.
The announcement comes as the country is gearing up for a key election next year, with the parties in Chancellor Angela Merkel's grand right-left coalition keen to woo ageing voters.
The weak inflation data -- core prices excluding fresh food fell 0.4 percent from a year ago -- come several weeks after Japan's central bank pushed back the timeline for hitting its 2.0 percent inflation target.
Roberto Azevedo says he is 'ready to talk' to US President-elect who has promised to pull US out of other trade agreements
The Ifo's headline business confidence index reached 110.4 points in November, unchanged from the October reading, and the highest level since April 2014.
More than 900 flights scheduled for Thursday cancelled as strike by pilots enters second day
Gross domestic product was expected to grow by only 1.4 percent next year -- sharply down from the prior estimate of 2.2 percent given in March.