May 5 (Bloomberg) -- A single Asian currency may take years to develop, Japan's Finance Minister Sadakazu Tanigaki said.

The Association of Southeast Asian Nations, China, Japan and South Korea said yesterday they'll study the creation of an index of the region's currencies that could be a precursor to a common exchange unit. The Asian Development Bank in March said it was developing such an index, called the Asian Currency Unit.

The idea of a single currency for Asia and of integrating the region's economies came about after the financial crisis of 1997-98 and has been backed by the Asian Development Bank President Haruhiko Kuroda. A common Asian currency would make it easier for companies and governments to borrow at lower rates of interest, according to Standard & Poor's.

``Currency integration won't take place overnight as was seen in the experience in Europe,'' Tanigaki said at the annual meeting of the Asian Development Bank in Hyderabad, India. ``Although such move is not in sight, not only economic cooperation but also political will will be required to see currency integration in Asia.''

Finance Ministers of the group of 13 Asian nations yesterday said a Japanese research institute would study the steps needed to create ``regional monetary units.''

`A Generation'

A currency index ``can be seen as an initial step toward an Asian currency unit, which would be the equivalent of the euro, but it's something that may be possible in a generation, say 25 years,'' Tim Condon, head of Asian markets research at ING Groep NV in Singapore, said in a telephone interview.

Developing a single Asian currency will help borrowers to tap Asia's savings and ``help to develop a vibrant Asian bond market as we have seen in Europe,'' Surinder Kathpalia, S&P's managing director said today in an interview in Hyderabad. ``But that is still very long way off.''

A common Asian currency isn't a precondition for the development of a pan-Asian bond market, Asian Development Bank Chief Economist Ifzal Ali told reporters today. The European bond market was functional well before the euro became a common currency, he said.

Asean Secretary General Ong Keng Yong said in an interview yesterday that the development of a single currency isn't high on his group's agenda. ``People like to talk about it but these are just academic discussions,'' Ong said.

The creation of a regional currency ``is a thing that they will study and the ADB, Asean Plus Three and Japan, China and South Korea are studying it at the same time,'' Zembei Mizoguchi, Japan's former top currency official, said in an interview. ``It is impossible to see how all of this is going to pan out. It won't be easy.''

To contact the reporter for this story: Amit Prakash in Hyderabad, India, at aprakash1@bloomberg.net;

Last Updated: May 5, 2006 10:21 EDT