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Does East Asia Have a Working Financial Safety Net?

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  • Jayant Menon
  • Hal Hill

Abstract

type="main"> Financial safety nets in Asia have come a long way since the Asian financial crisis (AFC) of 1997/1998. With Asian countries not wanting to rely solely on the IMF again, the Chiang Mai Initiative (CMI) was created in 2000. When the CMI also proved inadequate following the global financial crisis, it was first multilateralized (CMIM), and then doubled in size to US$240bn, while the IMF de-linked portion was increased to 30 percent of the available country quotas. A surveillance unit, the ASEAN+3 Macroeconomic Research Office, was set up in 2001. These are impressive developments, but are they enough to make the CMIM workable? Without clear and rapid-response procedures to handle a fast-developing financial emergency, we argue that it is unlikely that the CMIM will be used even as a complement to the IMF. To serve as a stand-alone option, however, its size or the IMF de-linked portion of funds needs to be further increased, as does its membership, to add diversity. Only if the ASEAN+3 Macroeconomic Research Office can develop into an independent and credible surveillance authority would it then perhaps be in a position to lead the next rescue.

Suggested Citation

  • Jayant Menon & Hal Hill, 2014. "Does East Asia Have a Working Financial Safety Net?," Asian Economic Journal, East Asian Economic Association, vol. 28(1), pages 1-17, March.
    • Handle: RePEc:bla:asiaec:v:28:y:2014:i:1:p:1-17
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    File URL: http://hdl.handle.net/10.1111/asej.12022
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    References listed on IDEAS

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    1. Iwan J. Azis, 2012. "Asian Regional Financial Safety Nets? Don't Hold Your Breath," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 8(3), pages 321-340, August.
    2. C. Randall Henning, 2011. "Coordinating Regional and Multilateral Financial Institutions," Working Paper Series WP11-9, Peterson Institute for International Economics.
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    Cited by:

    1. Haryo Aswicahyono & Hal Hill, 2014. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 50(3), pages 319-346, December.
    2. Wiggins, Rosalind & Hoffner, Benjamin & Feldberg, Greg & Metrick, Andrew, 2023. "Central Bank Foreign Currency Swaps and Repo Facilities Survey," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 5(1), pages 25-111, July.
    3. Maksym Kulbida, 2017. "International Monetary Fund And East Asia: Developments, Challenges, And Lessons Learned," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 3(5).
    4. Hal Hill, 2013. "Is there a Southeast Asian Development Model?," Departmental Working Papers 2013-19, The Australian National University, Arndt-Corden Department of Economics.
    5. Jayant Menon, 2021. "ASEAN’s newer member countries in two financial crises: Impact, response and lessons," Departmental Working Papers 2021-27, The Australian National University, Arndt-Corden Department of Economics.
    6. Hal Hill, 2018. "Southeast Asia in the global economy: a selective analytical survey," Departmental Working Papers 2018-12, The Australian National University, Arndt-Corden Department of Economics.

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