Key thinks common currency with Australia mildly sensible idea

A common currency with Australia is a "mildly sensible idea" but unlikely to become a reality, Prime Minister John Key said yesterday.

Mr Key and a number of senior Cabinet ministers were across the Tasman last week to forge ever closer economic and other ties with Australia.

Work was discussed on unifying commercial law, reducing travel barriers and integrating investment regimes.

Mr Key said the idea of a common currency was not raised at a joint Cabinet meeting or the Australian New Zealand Leadership Forum.

Asked about the issue on TVNZ's Q&A programme, Mr Key said: "I have always been of the view that it is actually a mildly sensible idea."

It would make it simpler for New Zealand businesses exporting to the larger market of Australia and remove risks around currency movements.

The biggest problem would be the loss of control over monetary policy, which meant New Zealand's economic performance and needs would not be reflected in interest rates and the value of the dollar.

"I think there are benefits and pros and cons, but do I think it will happen? The honest answer is no," Mr Key said.

A single currency had never really been on anyone's political agenda and there was no appetite to look at it seriously.

Mr Key said wider economic integration was needed to give easier access to Australia's larger markets and from there a foothold to work in more difficult countries.