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Towards regional monetary cooperation in East Asia: lessons from other parts of the world

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  • Masahiro Kawai

    (University of Tokyo, Japan)

  • Shinji Takagi

    (Osaka University, Japan)

Abstract

This paper discusses regional monetary cooperation for East Asia, by drawing lessons from the European Payments Union, the CFA Franc Zone and the Arab Monetary Fund. Along with the well-known experience of the European Monetary System, these experiences suggest that effective monetary cooperation should include: (1) a surveillance mechanism; (2) a regional financing facility; (3) a common unit of account; and (4) exchange rate coordination. In East Asia, the existing mechanisms of regional surveillance must be strengthened, and the liquidity support mechanism under the Chiang Mai Initiative must evolve into a common pool of foreign exchange reserves. Over the longer term, the region may need to create its own common unit of account and to develop a framework for exchange rate coordination. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Masahiro Kawai & Shinji Takagi, 2005. "Towards regional monetary cooperation in East Asia: lessons from other parts of the world," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 10(2), pages 97-116.
  • Handle: RePEc:ijf:ijfiec:v:10:y:2005:i:2:p:97-116
    DOI: 10.1002/ijfe.267
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    References listed on IDEAS

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    1. Haruhiko Kuroda & Masahiro Kawai, 2002. "Strengthening Regional Financial Cooperation in East Asia," Asia Pacific Economic Papers 332, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    2. Bayoumi, Tamim & Ostry, Jonathan D, 1997. "Macroeconomic Shocks and Trade Flows within Sub-Saharan Africa: Implications for Optimum Currency Arrangements," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 6(3), pages 412-444, October.
    3. Célestin Monga, 1997. "A Currency Reform Index for Western and Central Africa," The World Economy, Wiley Blackwell, vol. 20(1), pages 103-126, January.
    4. Masahiro Kawai & Shinji Takagi, 2005. "Strategy for a Regional Exchange Rate Arrangement in East Asia: Analysis, Review and Proposal," Global Economic Review, Taylor & Francis Journals, vol. 34(1), pages 21-64.
    5. Honohan, Patrick, 1990. "Monetary cooperation in the CFA zone," Policy Research Working Paper Series 389, The World Bank.
    6. Rother, Philipp C, 1999. "Money Demand in the West African Economic and Monetary Union--The Problems of Aggregation," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(3), pages 422-447, October.
    7. Michel Galy & Michael T. Hadjimichael, 1997. "The CFA Franc Zone and the EMU," IMF Working Papers 97/156, International Monetary Fund.
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    Cited by:

    1. repec:wsi:serxxx:v:60:y:2015:i:02:n:s0217590815500137 is not listed on IDEAS
    2. Gupta, Abhijit Sen, 2012. "Exchange Rate Coordination in Asia: Evidence using the Asian Currency Unit," ADBI Working Papers 356, Asian Development Bank Institute.
    3. Benjamin Keddad, 2013. "Assessing Asian Exchange Rates Coordination under Regional Currency Basket System," AMSE Working Papers 1345, Aix-Marseille School of Economics, Marseille, France, revised Sep 2013.
    4. Reszat, Beate, 2003. "How has the European Monetary Integration Process Contributed to Regional Financial Market Integration?," HWWA Discussion Papers 221, Hamburg Institute of International Economics (HWWA).
    5. Capannelli, Giovanni, 2011. "Institutions for Economic and Financial Integration in Asia: Trends and Prospects," ADBI Working Papers 308, Asian Development Bank Institute.
    6. OGAWA Eiji & Zhiqian WANG, 2012. "The AMU Deviation Indicators Based on the Purchasing Power Parity and Adjusted by the Balassa-Samuelson Effect," Discussion papers 12078, Research Institute of Economy, Trade and Industry (RIETI).
    7. Benjamin Keddad, 2013. "Exchange rate coordination in Asia under regional currency basket systems," Economics Bulletin, AccessEcon, vol. 33(4), pages 2913-2929.
    8. Eiji Ogawa & Zhiqian Wang, 2012. "The AMU Deviation Indicators Based on the Purchasing Power Parity and Adjusted by the Balassa-Samuelson Effect," Global COE Hi-Stat Discussion Paper Series gd12-255, Institute of Economic Research, Hitotsubashi University.
    9. Hamilton-Hart, Natasha, 2011. "Distribution, Domestic Politics and Monetary Cooperation in East Asia," ADBI Working Papers 332, Asian Development Bank Institute.
    10. Takagi, Shinji, 2012. "Establishing Monetary Union in the Gulf Cooperation Council: What Lessons for Regional Cooperation?," ADBI Working Papers 390, Asian Development Bank Institute.
    11. Ryuzo Miyao, 2010. "Monetary Policy and Exchange Rate Stability in East Asia," Chapters,in: Asian Regionalism in the World Economy, chapter 9 Edward Elgar Publishing.
    12. Abhijit Sen Gupta, 2015. "Extent Of Exchange Rate Coordination In Asia," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(02), pages 1-25.

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