The country can adopt an exchange rate regime in which the central value can be determined by the basket value that reflects real effective exchange rate stability with a wide band for flexibility. The basket value can be determined as a weighted average of the trading partners' exchange rate, where weights reflect the shares of trades. Typically, it would become a basket of the dollar, the yen, and the euro. When an Asian country calculates the basket value, the basket includes neighbors' currencies as well as the dollar, the yen, and the euro, since there is a substantial amount of intra-regional trade. This reasoning makes it clear that the Asian region has an incentive to think of the exchange rate regime jointly.
Coordination is needed to calculate an optimal currency arrangement for the region.
One idea is to calculate and utilize a common currency unit that is a weighted average of the major currencies, the dollar, the yen, and the euro. The viable exchange rate cannot be independent from domestic policies. In fact, some of the currency board countries had had high inflation due to unsustainable fiscal and monetary policies, so that the argument to tie the hands of the domestic policies gained support. On the other hand, if domestic policies are prudent and economic shocks are relatively minor, exchange rate movements even under the floating exchange rate regime may be very stable. Recognizing that, the exchange rate movement will affect domestic policies, while domestic policies will influence the exchange rate.