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The Future of the Chiang Mai Initiative: An Asian Monetary Fund?

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  • C. Randall Henning

    () (Peterson Institute for International Economics)

Abstract

Senior officials of East Asian governments and central banks will hold several meetings between February and May 2009 to consider, among other things, transforming the Chiang Mai Initiative (CMI) from a network of bilateral swap arrangements into a collectively managed fund--which they refer to as "CMI multilateralisation." The region's disaffection from the International Monetary Fund (IMF), stemming from the 1997-98 financial crisis, sustains the attraction of such a fund among the ten members of the Association of Southeast Asian Nations plus China, Japan, and South Korea (ASEAN+3). The present financial crisis presents a moment of truth for ASEAN+3: Are they serious about regional financial cooperation? Creating a common regional fund would require addressing questions of obligations, contributions, and rights of members as well as the size, governance, and borrowing arrangements. ASEAN+3 officials appear to be converging on $120 billion as the size of the fund. But they have yet to decide on the specific contributions from each member and exactly how joint decisions will be made. The shares of China and Japan are particularly important, because they will determine the relative influence of the two countries. Henning argues that CMI multilateralisation could contribute to the global financial architecture by supplementing the resources of the IMF and streamlining negotiations over financial rescues. ASEAN+3 should develop their own surveillance mechanism further with assistance of international financial institutions. Given the current weakness of regional surveillance, however, East Asian governments should continue to link their bilateral swaps and any common fund to the IMF. Henning urges the international community to establish guidelines for the respective roles of regional facilities, the IMF and other international financial institutions.

Suggested Citation

  • C. Randall Henning, 2009. "The Future of the Chiang Mai Initiative: An Asian Monetary Fund?," Policy Briefs PB09-5, Peterson Institute for International Economics.
  • Handle: RePEc:iie:pbrief:pb09-5
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    Cited by:

    1. Boubakri, Salem & Guillaumin, Cyriac, 2015. "Regional integration of the East Asian stock markets: An empirical assessment," Journal of International Money and Finance, Elsevier, vol. 57(C), pages 136-160.
    2. Kawai, Masahiro, 2015. "From the Chiang Mai Initiative to an Asian Monetary Fund," ADBI Working Papers 527, Asian Development Bank Institute.
    3. Ilene Grabel, 2011. "Promising Avenues, False Starts and Dead Ends: Global Governance and Development Finance in the Wake of the Crisis," Working Papers wp241_revised, Political Economy Research Institute, University of Massachusetts at Amherst.
    4. Catherine Figuière & Laëtitia Guilhot, 2010. "L'Asie d'une crise à l'autre : l'impact sur l'intégration régionale," Post-Print halshs-00493869, HAL.
    5. C. Randall Henning & Mohsin S. Khan, 2011. "Asia and Global Financial Governance," Working Paper Series WP11-16, Peterson Institute for International Economics.
    6. Prasad, Eswar S. & Ye, Lei, 2011. "The renminbi’s role in the global monetary system," Proceedings, Federal Reserve Bank of San Francisco, issue Nov, pages 127-197.
    7. Peter DRYSDALE & Shiro ARMSTRONG, 2010. "International and Regional Cooperation: Asia's Role and Responsibilities," Asian Economic Policy Review, Japan Center for Economic Research, vol. 5(2), pages 157-173, December.
    8. Manuel R. Agosin, 2013. "Un Fondo Monetario Latinoamericano: Dimensiones Requeridas y Modalidades," DOCUMENTOS DE DISCUSION FLAR 011017, FONDO LATINO AMERICANO DE RESERVAS - FLAR.

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