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Prospects for Asian Monetary Cooperation After the Asian Financial Crisis. Pipedream or Possible Reality?

  • Wilson, Peter

    (National University of Singapore)

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    This paper re-assesses the prospects for greater monetary integration in Asia in the wake of the Asian financial crisis of 1997. The Asian crisis highlighted the absence of well-developed supranational institutions in Asia to provide early warning signals of impending currency or balance of payments problems, access to unconditional funds to cope with financial problems, and a common defensive mechanism to deal with speculative movements in exchange rates. Since 1997 there have been a number of initiatives to enhance monetary cooperation in the region including a Japanese proposal for an Asian Monetary Fund, the Chiang Mai Initiative at the Asean+3 meeting in May 2000, the Kobe Research Project, and the currency swap agreements and surveillance machinery initiated at the Asian Development Bank Meeting in Honolulu in May 2001. We find that whilst a common monetary and exchange rate policy in EA is unlikely in the foreseeable future, until the net economic benefits of giving up unilateral exchange rate regimes are more apparent, a good case can be made for placing responsibility for the functions of macroeconomic surveillance and regional resource pooling within a permanent institution which could evolve over time into a fully-fledged Asian Monetary Fund with its own Asia-specific rules on conditionality.

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    File URL: http://swopec.hhs.se/eijswp/papers/eijswp0151.pdf
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    Paper provided by The European Institute of Japanese Studies in its series EIJS Working Paper Series with number 151.

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    Length: 56 pages
    Date of creation: 01 Aug 2002
    Date of revision:
    Handle: RePEc:hhs:eijswp:0151
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    1. Agnès Bénassy-Quéré, 1996. "Exchange Rate Regimes and Policies in Asia," Working Papers 1996-07, CEPII research center.
    2. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear Of Floating," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 379-408, May.
    3. Jeffrey A. Frankel, 1992. "Is Japan creating a yen bloc in East Asia and the Pacific?," Pacific Basin Working Paper Series 92-09, Federal Reserve Bank of San Francisco.
    4. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-73, September.
    5. Wei, S.J. & Frankel, J.A., 1992. "Yen Bloc or Dollar Bloc: Exchange Rate Policies of the East Asian Economies," Papers 92-08, University of Birmingham - International Financial Group.
    6. Junichi Goto & Koichi Hamada, 1994. "Economic Preconditions for Asian Regional Integration," NBER Chapters, in: Macroeconomic Linkage: Savings, Exchange Rates, and Capital Flows, NBER-EASE Volume 3, pages 359-388 National Bureau of Economic Research, Inc.
    7. Bayoumi, Tamim, 1994. "A Formal Model of Optimum Currency Areas," CEPR Discussion Papers 968, C.E.P.R. Discussion Papers.
    8. George Tavlas, 1994. "The theory of monetary integration," Open Economies Review, Springer, vol. 5(2), pages 211-230, March.
    9. Melitz, Jacques, 1991. "A Suggested Reformulation of the Theory of Optimal Currency Areas," CEPR Discussion Papers 590, C.E.P.R. Discussion Papers.
    10. Tamim Bayoumi & Paolo Mauro, 2001. "The Suitability of ASEAN for a Regional Currency Arrangement," The World Economy, Wiley Blackwell, vol. 24(7), pages 933-954, 07.
    11. Frankel, Jeffrey A & Rose, Andrew K, 1996. "The Endogeneity of the Optimum Currency Area Criteria," CEPR Discussion Papers 1473, C.E.P.R. Discussion Papers.
    12. Barry Eichengreen and Tamim Bayoumi., 1996. "Is Asia an Optimum Currency Area? Can It Become One? Regional, Global and Historical Perspectives on Asian Monetary Relations," Center for International and Development Economics Research (CIDER) Working Papers C96-081, University of California at Berkeley.
    13. repec:cup:cbooks:9780521644358 is not listed on IDEAS
    14. Peter WILSON, 2000. "The Dilemma Of A More Advanced Developing Country: Conflicting Views On The Development Strategy Of Singapore," The Developing Economies, Institute of Developing Economies, vol. 38(1), pages 105-134, 03.
    15. Bayoumi, T. & Eichengreen, B., 1994. "One Money or Many? Analysing the Prospects for Monetary Unification in Various Parts of the World," Princeton Studies in International Economics 76, International Economics Section, Departement of Economics Princeton University,.
    16. Tse, Y. K. & Ng, L. K., 1997. "The cointegration of Asian currencies revisited," Japan and the World Economy, Elsevier, vol. 9(1), pages 109-114, March.
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