IT may seem like a decade ago when the Australian Senate Committee suggested Pacific islands adopt the Australian dollar as a possible currency but for local academic, Professor Tiru Jayaraman, the idea still fascinates him.
The University of the South Pacific lecturer was recently awarded the best research publication award this week on Single Currency for Pacific Islands which was published by a New York publishing house in August this year.
Professor Jayaraman, who teaches monetary economics, said he was taken aback by the suggested policy measure from the committee that he presented a paper on common currency under ODN auspices in Rio de Janeiro, Brazil in 2001.
"It was once thought a single currency would bring about monetary discipline and save scarce human resources in Pacific island countries.
"Having one currency and one central bank would release skilled resources for employment in other critical areas."
However, he said the Euro zone experiences have shown certain pre-conditions have to be fulfilled, such as pre-union low budget deficits and low debt/Gross Domestic Product ratio as well as fiscal discipline after the introduction of a single currency.
"Further, all member countries in the past should have faced and in the future face the same kind of external shocks so that one single monetary policy would be made applicable. The Greek experience is relevant here."
He said the Pacific islands were not ready. They have to satisfy the stringent conditions, a technical term known as optimum currency criteria.
"Pacific island countries should strive for greater integration with Australia in terms of trade and investment and labour mobility before seeking a currency union."
In 2007, Professor Jayaraman was asked by the Commonwealth Secretariat to write a paper on economic integration for their collected volume of articles on Issues in Small Developing States.
He was awarded the USP 2008 VC Inaugural Research Prize for that research. In 2009, he was asked by the Secretariat to write a book on monetary policy formulation and implementation in the region. The book was published last year and has been now recognised by USP.