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Regional and Global Monetary Cooperation

  • Mario Lamberte

    (Asian Development Bank Institute (ADBI))

  • Peter J. Morgan

The increasing occurrence of national, regional, and global financial crises, together with their rising costs and complexity, have increased calls for greater regional and global monetary cooperation. This is particularly necessary in light of volatile capital flow movements that can quickly transmit crisis developments in individual countries to other countries around the world. Global financial safety nets (GFSNs) are one important area for monetary cooperation. This paper reviews the current situation of regional and global monetary cooperation, focusing on financial safety nets, with a view toward developing recommendations for more effective cooperation, especially between the International Monetary Fund (IMF) and regional financial arrangements (RFAs). A GFSN should have adequate resources to deal with multiple crises, should be capable of rapid and flexible response, and should not be encumbered by historical impediments such as the IMF stigma that would limit its acceptance by recipient countries. Oversight of a GFSN needs to be based on cooperation between global and regional forums, for example, the G20 and ASEAN+3 or East Asia Summit (EAS). Such a GFSN should include the IMF and RFAs at a minimum, and it is highly recommended to find ways to include central banks as providers of swap lines and multilateral banks as well. The basic principles governing the cooperation of IMF and RFAs include rigorous and even-handed surveillance; respect of independence and decision-making processes of each institution and regional specificities; ongoing collaboration as a way to build regional capacity for crisis prevention; open sharing of information and joint missions where necessary; specialization based on comparative advantage; consistency of lending conditions and conditionality, although with flexibility; respect of the IMF as preferred creditor; subsidiarity; avoidance of moral hazard; and transparency.

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Paper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 23190.

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Date of creation: Feb 2012
Date of revision:
Handle: RePEc:eab:financ:23190
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  1. Reuven Glick & Andrew K. Rose, 1998. "Contagion and Trade: Why Are Currency Crises Regional?," NBER Working Papers 6806, National Bureau of Economic Research, Inc.
  2. Jean Pisani-Ferry & Yongding Yu & Agnès Bénassy-Quéré, 2011. "Reform of the international monetary system: Some concrete steps," Policy Contributions 516, Bruegel.
  3. Kawai, Masahiro, 2009. "Reform of the International Financial Architecture: An Asian Perspective," ADBI Working Papers 167, Asian Development Bank Institute.
  4. Masahiro Kawai & Peter A. Petri & Elif Sisli Ciamarra, 2010. "Asia in Global Governance: A Case for Decentralized Institutions," Chapters, in: Asian Regionalism in the World Economy, chapter 13 Edward Elgar.
  5. Barry Eichengreen, 2007. "Insurance Underwriter or Financial Development Fund: What Role for Reserve Pooling in Latin America?," Open Economies Review, Springer, vol. 18(1), pages 27-52, February.
  6. Unknown, 2010. "Reform of the Global Financial Architecture," Working Papers 444, Bruegel.
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