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Is Asian Currency Unit Attractive to East Asian Economies?

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  • Bin Zhang
  • Fan He

Abstract

Pegging the RMB exchange rate to the Asian currency unit (ACU) has not, at least in the short term, been proved a better solution than pegging to the US dollar or pegging to a G‐3 (US$, Japanese yen and euro) currency basket. Although the Asian currency unit can help Asian economies to keep the relative price of regional currencies stable, the cost of joining a formal regional monetary cooperation is the relinquishment of the autonomy of their domestic policies. Asian monetary cooperation needs to provide more potential benefits if it is to attract Asian economies. We argue that Asian monetary cooperation should be designed to solve the problem of regional trade imbalance, and regional exchange rate policy coordination should be adopted as the first step towards exchange rate cooperation. (Edited by Zhinan Zhang)

Suggested Citation

  • Bin Zhang & Fan He, 2007. "Is Asian Currency Unit Attractive to East Asian Economies?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 15(1), pages 62-76, January.
    • Handle: RePEc:bla:chinae:v:15:y:2007:i:1:p:62-76
    DOI: 10.1111/j.1749-124X.2007.00054.x
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    References listed on IDEAS

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    1. Ogawa, Eiji & Ito, Takatoshi, 2002. "On the Desirability of a Regional Basket Currency Arrangement," Journal of the Japanese and International Economies, Elsevier, vol. 16(3), pages 317-334, September.
    2. Eiji Ogawa & Junko Shimizu, 2005. "A Deviation Measurement for Coordinated Exchange Rate Policies in East Asia," Discussion papers 05017, Research Institute of Economy, Trade and Industry (RIETI).
    3. Kawai, Masahiro & Takagi, Shinji, 2000. "Proposed strategy for a regional exchange rate arrangement in post-crisis East Asia," Policy Research Working Paper Series 2503, The World Bank.
    4. Ronald I. McKinnon, 2004. "The East Asian exchange rate dilemma and the world dollar standard," Chapters, in: Suthiphand Chirathivat & Emil-Maria Claassen & Jürgen Schroeder (ed.), East Asia's Monetary Future, chapter 6, Edward Elgar Publishing.
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