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Yen or Yuan? China's role in the future of Asian monetary integration

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  • Hefeker, Carsten
  • Nabor, Andreas

Abstract

Most proposals for Asian monetary cooperation assign a special role to the Japanese yen as an anchor currency. We focus instead on the potential role of the Chinese renminbi. It becomes increasingly clear that China will assume the role of the dominant economy in the region, and that it will become a more important destination for Asian products than Japan in as little as five years. This development should assign a special role to the Chinese currency and its exchange rate to the other Asian currencies. It is rather unlikely that the renminbi will assume a dominant role immediately but by drawing comparisons with the European monetary integration process, it seems possible to design a system in which most of the present currencies have a role, but where the relative weights shift over time. The evolution of the ERM is a model for the process of Asian monetary integration.

Suggested Citation

  • Hefeker, Carsten & Nabor, Andreas, 2002. "Yen or Yuan? China's role in the future of Asian monetary integration," HWWA Discussion Papers 206, Hamburg Institute of International Economics (HWWA).
    • Handle: RePEc:zbw:hwwadp:26125
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    Cited by:

    1. Tourk, Khairy, 2004. "The political economy of east Asian economic integration," Journal of Asian Economics, Elsevier, vol. 15(5), pages 843-888, October.

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    More about this item

    Keywords

    China; Asia; Monetary Integration; Exchange Rate Regimes;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F3 - International Economics - - International Finance

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