Australia, NZ unlikely to share currency: official

• Source: Xinhua
• [16:16 August 19 2009]
• Comments

A shared currency between Australia and New Zealand (NZ) has merit but is unlikely to eventuate, according to New Zealand Prime Minister John Key.

Speaking to a business luncheon in Melbourne on Wednesday, Key said adopting the Australian dollar would mean New Zealand forfeiting control of its monetary policy.

"My view is it is unlikely that it will happen, but it's not an idea without some merit," he told delegates at a Committee for Economic Development Australia function.

"The reason I don't think it would happen is not actually because of parochial, political reasons.

"I think it's because... you have to abandon, from New Zealand's perspective, control of monetary policy."

Key said New Zealand needed to retain its fiscal independence in case of an economic catastrophe, such as an outbreak of foot and mouth disease.

Only then could there be an enormous correction in currency to try to offset "economic carnage", he said.

"As an example, you've seen in Ireland at the moment the challenges that they're having where they're part of the European Union, the currency's the Euro and they really can't get the currency depreciation that they need to kick-start their economy."

Key will meet with Australian Prime Minister Kevin Rudd on Thursday as part of a five-day tour.