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Monetary Policy Cooperation To Support Asian Economic Integration

Author

Listed:
  • HWEE KWAN CHOW

    (School of Economics Singapore Management University, 90 Stamford Road, Singapore 178903, Singapore)

  • PETER NICHOLAS KRIZ

    (School of Economics Singapore Management University, 90 Stamford Road, Singapore 178903, Singapore)

  • ROBERTO S. MARIANO

    (School of Economics Singapore Management University, 90 Stamford Road, Singapore 178903, Singapore)

  • AUGUSTINE H. H. TAN

    (School of Economics Singapore Management University, 90 Stamford Road, Singapore 178903, Singapore)

Abstract

This paper considers the form of monetary policy coordination and regional exchange rate arrangement that would best support economic and financial integration in East Asia. In view of the region's economic diversity, we propose a graduated program of informal policy cooperation from weak forms of cooperation to more intensive modes of cooperation such as the adoption of common monetary policy objectives. An array of informal monetary arrangements rooted to the degree of institutional development can improve the effectiveness of both sovereign and regional institutions, and promote integration in East Asia. Drawing upon the European experience with the Exchange Rate Mechanism (ERM), we conclude that East Asia should first embark on other forms of integration to aid in the development of a high degree of real and nominal convergence amongst the regional countries. Only then would an ERM-type system that employs a regional monetary unit become more sustainable and less susceptible to speculative currency attacks in the region.

Suggested Citation

  • Hwee Kwan Chow & Peter Nicholas Kriz & Roberto S. Mariano & Augustine H. H. Tan, 2010. "Monetary Policy Cooperation To Support Asian Economic Integration," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 55(01), pages 83-101.
    • Handle: RePEc:wsi:serxxx:v:55:y:2010:i:01:n:s0217590810003626
    DOI: 10.1142/S0217590810003626
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    References listed on IDEAS

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    Cited by:

    1. Pontines, Victor, 2015. "How useful is an Asian Currency Unit (ACU) index for surveillance in East Asia?," Economic Systems, Elsevier, vol. 39(2), pages 269-287.
    2. Pontines, Victor & You, Kefei, 2015. "Asian Currency Unit (ACU), deviation indicators and exchange rate coordination in East Asia: A panel-based convergence approach," Japan and the World Economy, Elsevier, vol. 36(C), pages 42-55.

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    More about this item

    Keywords

    Regional Economic Integration; Monetary Policy Cooperation; Exchange Rate Arrangements; Sequencing; E58; F31; F33;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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