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East Asian Financial Cooperation

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  • C. Randall Henning

    (Peterson Institute for International Economics)

Abstract

Since the financial crisis in the late 1990s, Asian governments have been considering strengthening regional monetary and financial cooperation. Proposals have ranged from the Asian Monetary Fund to common currencies. During the past two years, China, Japan, Korea, and the member-states of ASEAN have established a set of financial facilities under an agreement made in Chiang Mai, Thailand. The Chiang Mai Initiative (CMI) mobilizes a portion of the very large reserve holdings of its members for financial stabilization in a crisis. Organized under the "ASEAN plus three" grouping, these arrangements do not include the United States or other countries outside the region.The CMI thus raises several important questions: Under what terms will financing be extended on a regional basis? Is it likely to stabilize or destabilize international capital flows? What will CMI's relationship be to the International Monetary Fund and other official financial institutions? How should governments build on these arrangements in the future? Could they provide the basis for broader integration of the East Asian region?This study examines the case for and against regional financial arrangements in East Asia, describes the CMI, compares it to financial arrangements in other regions, and recommends how the Initiative can preserve its complementarity to multilateral institutions and be strengthened in the future. The study specifically addresses the concerns of Americans, Europeans, and multilateral organizations, assessing the pros and cons of such regional financial arrangements for the global system.

Suggested Citation

  • C. Randall Henning, 2002. "East Asian Financial Cooperation," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa68.
  • Handle: RePEc:iie:ppress:pa68 Note: Policy Analyses in International Economics 68
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "From Financial Crash to Debt Crisis," American Economic Review, American Economic Association, vol. 101(5), pages 1676-1706, August.
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    Cited by:

    1. Michael G. Plummer, 2012. "Regional Monitoring of Capital Flows and Coordination of Financial Regulation: Stakes and Options for Asia," Chapters,in: Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia, chapter 8 Edward Elgar Publishing.
    2. Barry Eichengreen, 2012. "Regional Financial Arrangements and the International Monetary Fund," Finance Working Papers 23354, East Asian Bureau of Economic Research.
    3. Joseph Joyce & Todd Sandler, 2008. "IMF retrospective and prospective: A public goods viewpoint," The Review of International Organizations, Springer, vol. 3(3), pages 221-238, September.
    4. Julie Gilson, 2012. "Regional leadership—Japanese style: Japan through the crisis," Asia Europe Journal, Springer, vol. 9(2), pages 211-223, March.
    5. Pomfret, Richard, 2005. "Sequencing trade and monetary integration: issues and application to Asia," Journal of Asian Economics, Elsevier, vol. 16(1), pages 105-124, February.
    6. Gordon de Brouwer, 2004. "Institutions to Promote Financial Stability: Reflections on East Asia and an Asian Monetary Fund," Treasury Working Papers 2004-02, The Treasury, Australian Government, revised Sep 2004.
    7. Masahiro Kawai, 2010. "Reform Of The International Financial Architecture: An Asian Perspective," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 55(01), pages 207-242.
    8. Douglas W. Arner & Paul Lejot & Wei Wang, 2010. "Governance and Financial Integration in East Asia," Chapters,in: Asian Regionalism in the World Economy, chapter 6 Edward Elgar Publishing.
    9. Yin-Wong Cheung & Jude Yuen, 2005. "The Suitability Of A Greater China Currency Union," Pacific Economic Review, Wiley Blackwell, vol. 10(1), pages 83-103, February.
    10. Ulrich Volz, 2013. "Lessons of the European crisis for regional monetary and financial integration in East Asia," Asia Europe Journal, Springer, vol. 11(4), pages 355-376, December.
    11. C. Randall Henning & Mohsin S. Khan, 2011. "Asia and Global Financial Governance," Working Paper Series WP11-16, Peterson Institute for International Economics.
    12. Kwack, Sung Yeung, 2004. "An optimum currency area in East Asia: feasibility, coordination, and leadership role," Journal of Asian Economics, Elsevier, vol. 15(1), pages 153-169, February.
    13. Hamilton-Hart, Natasha, 2011. "Distribution, Domestic Politics and Monetary Cooperation in East Asia," ADBI Working Papers 332, Asian Development Bank Institute.
    14. Kyung Tae Lee & Deok Ryong Yoon, 2007. "A Roadmap for East Asian Monetary Integration : The Necessary First Step," Macroeconomics Working Papers 21971, East Asian Bureau of Economic Research.
    15. Nephil Matangi Maskay, 2003. "Patterns of Shocks and Regional Monetary Cooperation in South Asia," IMF Working Papers 03/240, International Monetary Fund.
    16. Richard Pomfret, 2005. "Sequencing Trade and Monetary Integration," Others 0502004, EconWPA.
    17. Parsons, Craig & Richardson, J. David, 2004. "Lessons for Asia?: European experiences--in American perspective--in legitimizing market integration," Journal of Asian Economics, Elsevier, vol. 14(6), pages 885-907, January.
    18. Biswa Nath Bhattacharyay, 2010. "Financing Asia’s Infrastructure : Modes of Development and Integration of Asian Financial Markets," Finance Working Papers 21883, East Asian Bureau of Economic Research.
    19. Richard Pomfret, 2003. "Formation and Dissolution of Monetary Unions: Evidence from Europe, and Lessons for Elsewhere," School of Economics Working Papers 2003-03, University of Adelaide, School of Economics.
    20. Takuji Kinkyo, 2004. "The case for regional exchange rate arrangement in East Asia," Working Papers 141, Department of Economics, SOAS, University of London, UK.
    21. Dent, Christopher M., 2010. "Organizing the Wider East Asia Region," Working Papers on Regional Economic Integration 62, Asian Development Bank.
    22. Yeh Kuo-chun, 2009. "Will a Taiwan-China Monetary Union be Feasible? Lessons from Europe," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 14(3), pages 1-36, March.
    23. Kohsaka, Akira, 2004. "A fundamental scope for regional financial cooperation in East Asia," Journal of Asian Economics, Elsevier, vol. 15(5), pages 911-937, October.
    24. Peter B. Kenen & Ellen E. Meade, 2006. "Monetary integration in East Asia," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.

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