Exchange-Rate Arrangements and Financial Integration in East Asia: On a Collision Course?
Financial integration in East Asia is actively being pursued and will in due course lead to substantial mobility of capital between economies in the region. Plans for monetary cooperation as a prelude to monetary integration and ultimately monetary unification are also proposed. These plans often suggest that central banks should adopt some form of common exchange rate policy in the transition period towards full monetary union. This paper argues that this is a dangerous path in the context of highly integrated financial markets. An alternative approach is proposed where independent central banks coordinate their monetary policies through the adoption of common objectives and by building an appropriate institutional framework. When this coordination process has progressed to the point where interest rate developments are similar across the region, and if in the meantime the required institutional infrastructure has been build, the next step towards monetary unification can be taken among those central banks that so desire. The claim is that this transition path is likely to be robust and will limit the risk of currency crises.
|Date of creation:||Nov 2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (852)2878 1978
Fax: (852)2878 7006
Web page: http://www.hkimr.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ronald McKinnon & Gunther Schnabl, 2003.
"The East Asian Dollar Standard, Fear of Floating, and Original Sin,"
112003, Hong Kong Institute for Monetary Research.
- Ronald McKinnon & Gunther Schnabl, 2004. "The East Asian Dollar Standard, Fear of Floating, and Original Sin," Review of Development Economics, Wiley Blackwell, vol. 8(3), pages 331-360, 08.
- Ronald McKinnon & Gunther Schnabl, 2003. "The East Asian Dollar Standard, Fear of Floating, and Original Sin," Working Papers 03001, Stanford University, Department of Economics.
- Jesus Crespo Cuaresma & Ernest Gnan & Doris Ritzberger-Grünwald, 2003.
"Searching for the Natural Rate of Interest: a Euro-Area Perspective,"
84, Oesterreichische Nationalbank (Austrian Central Bank).
- JesÃºs Cuaresma & Ernest Gnan & Doris Ritzberger-Gruenwald, 2004. "Searching for the natural rate of interest: a euro area perspective," Empirica, Springer, vol. 31(2), pages 185-204, June.
- Corrinne Ho & Guonan Ma & Robert N McCauley, 2005. "Trading Asian currencies," BIS Quarterly Review, Bank for International Settlements, March.
- P. Swamy & George Tavlas, 2007.
"The New Keynesian Phillips Curve and Inflation Expectations: Re-Specification and Interpretation,"
Springer, vol. 31(2), pages 293-306, May.
- George S. Tavlas & P.A.V.B. Swamy, 2006. "The New Keynesian Phillips Curve and Inflation Expectations: Re-Specification and Interpretation," Working Papers 34, Bank of Greece.
- Panayotis Kapopoulos & Sophia Lazaretou, 2005.
"Does Corporate Ownership Structure Matter for Economic Growth? A Cross-Country Analysis,"
21, Bank of Greece.
- Panayotis Kapopoulos & Sophia Lazaretou, 2009. "Does corporate ownership structure matter for economic growth? A cross-country analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 155-172.
- Sophocles N. Brissimis & Nicholas S. Magginas, 2006. "Monetary Policy Rules under Heterogeneous Inflation Expectations," Working Papers 35, Bank of Greece.
- Robert Neil McCauley, 2006. "Understanding monetary policy in Malaysia and Thailand: objectives, instruments and independence," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy in Asia: approaches and implementation, volume 31, pages 172-198 Bank for International Settlements.
- Guonan Ma & Eli M Remolona, 2005. "Opening markets through a regional bond fund: lessons from ABF2," BIS Quarterly Review, Bank for International Settlements, June.
- Sophocles N. Brissimis & Theodora S. Kosma, 2005. "Market Power, Innovative Activity and Exchange Rate Pass-Through," Working Papers 22, Bank of Greece.
- Harris Dellas & George Tavlas, 2004.
"Wage Rigidity and Monetary Union,"
12, Bank of Greece.
- Sideris, Dimitrios, 2006.
"Testing for long-run PPP in a system context: Evidence for the US, Germany and Japan,"
Journal of International Financial Markets, Institutions and Money,
Elsevier, vol. 16(2), pages 143-154, April.
- Dimitrios Sideris, 2004. "Testing for Long-Run PPP in a System Context: Evidence for the US, Germany and Japan," Working Papers 19, Bank of Greece.
- Hondroyiannis, George & Lazaretou, Sophia, 2004.
"Inflation persistence during periods of structural change: an assessment using Greek data,"
Working Paper Series
0370, European Central Bank.
- George Hondroyiannis & Sophia Lazaretou, 2007. "Inflation persistence during periods of structural change: an assessment using Greek data," Empirica, Springer, vol. 34(5), pages 453-475, December.
- George Hondroyiannis & Sophia Lazaretou, 2004. "Inflation Persistence during Periods of Structural Change: An Assessment Using Greek Data," Working Papers 13, Bank of Greece.
- Thanasis N. Christodoulopoulos & Ioulia Grigoratou, 2005. "Measuring Liquidity in the Greek Government Securities Market," Working Papers 23, Bank of Greece.
- Sylvia Kaufmann & Maria Teresa Valderrama, 2004. "Modeling Credit Aggregates," Working Papers 90, Oesterreichische Nationalbank (Austrian Central Bank).
- George A. Christodoulakis & Stephen E Satchell, 2006. "Exact Elliptical Distributions for Models of Conditionally Random Financial Volatility," Working Papers 32, Bank of Greece.
- Martin Schneider & Martin Spitzer, 2004. "Forecasting Austrian GDP using the generalized dynamic factor model," Working Papers 89, Oesterreichische Nationalbank (Austrian Central Bank).
- Christos Papazoglou, 2005. "Real Exchange Rate Dynamics and Output Contraction under Transition," Working Papers 29, Bank of Greece.
- George Stubos & Ioannis Tsikripis, 2005. "Regional Integration Challenges in South East Europe: Banking Sector Trends," Working Papers 24, Bank of Greece.
- George Hondroyiannis & P.A.V.B. Swamy & George Tavlas & Michael Ulan, 2008.
"Some Further Evidence on Exchange-Rate Volatility and Exports,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer, vol. 144(1), pages 151-180, April.
- George Hondroyiannis & P.A.V.B. Swamy & George S. Tavlas & Michael Ulan, 2005. "Some Further Evidence on Exchange-Rate Volatility and Exports," Working Papers 28, Bank of Greece.
- Faidon Kalfaoglou & Alexandros Sarris, 2006. "Modeling the Components of Market Discipline," Working Papers 36, Bank of Greece.
- Panayotis Kapopoulos & Sophia Lazaretou, 2006.
"Corporate Ownership Structure and Firm Performance: Evidence from Greek Firms,"
37, Bank of Greece.
- Panayotis Kapopoulos & Sophia Lazaretou, 2007. "Corporate Ownership Structure and Firm Performance: evidence from Greek firms," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(2), pages 144-158, 03.
- Harm Zebregs, 2004. "Intraregional Trade in Emerging Asia," IMF Policy Discussion Papers 04/1, International Monetary Fund.
- 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).
- Yiannis Stournaras, 2005. "Aggregate Supply and Demand, the Real Exchange Rate and Oil Price Denomination," Working Papers 26, Bank of Greece.
- Nicholas G. Zonzilos, 2004. "Econometric Modelling at the Bank of Greece," Working Papers 14, Bank of Greece.
- Sophocles N. Brissimis & Dimitris A. Sideris & Fragiska K. Voumvaki, 2004.
"Testing Long-Run Purchasing Power Parity under Exchange Rate Targeting,"
15, Bank of Greece.
- Brissimis, Sophocles N. & Sideris, Dimitris A. & Voumvaki, Fragiska K., 2005. "Testing long-run purchasing power parity under exchange rate targeting," Journal of International Money and Finance, Elsevier, vol. 24(6), pages 959-981, October.
- Dimitrios Sideris & Nicholas G. Zonzilos, 2005. "The Greek Model of the European System of Central Banks Multi-Country Model," Working Papers 20, Bank of Greece.
- Eleni Angelopoulou, 2005. "The Comparative Performance of Q-type and Dynamic Models of Firm Investment: Empirical Evidence from the UK," Working Papers 27, Bank of Greece.
- George A. Christodoulakis & Emmanuel C. Mamatzakis, 2005. "The European Union GDP Forecast Rationality under Asymmetric Preferences," Working Papers 30, Bank of Greece.
- Theodoros S. Papaspyrou, 2004. "EMU Strategies: Lessons from Past Experience in View of EU Enlargement," Working Papers 11, Bank of Greece.
When requesting a correction, please mention this item's handle: RePEc:hkm:wpaper:152006. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (HKIMR)
If references are entirely missing, you can add them using this form.