Quest for Financial Stability in East Asia: Establishment of an Independent Surveillance Unit “AMRO” and Its Future Challenges

Regional Financial Arrangements in East Asia made large institutional advances in the aftermath of the Global Financial Crisis. The network of bilateral swap agreements (BSA) under the Chiang Mai Initiative (CMI) was multilateralized (CMIM) in 2010. An independent surveillance unit called the ASEAN+3 Macroeconomic Research Office (AMRO) was established in 2011. Focusing on AMRO, this paper aims to (1) indicate salient features of the surveillance activities conducted by AMRO when initially established as a private company (“AMRO (Company)”) in 2011, (2) lay out the background and major changes upon the transformation of AMRO (Company) into an international organization (“AMRO (IO)”) in 2016, and (3) identify remaining challenges for AMRO (IO) in achieving monetary and financial stability in East Asia. AMRO (Company)’s surveillance was characterized in that (1) it was undertaken in line with the needs of the ASEAN+3 authorities and (2) greater attention was paid on (a) shortterm movements of private capital flows and (b) economic inter-linkages among ASEAN+3 countries where shocks may be transmitted. Upon the transformation into an international organization, AMRO (IO) was given new mandates to (1) support the CMIM’s operation and (2) publish its surveillance reports as per its pre-determined publication guideline. Remaining challenges are suggested, among others, on (1) developing AMRO’s policy recommendation capacity, (2) enhancing AMRO’s roles in the CMIM activation process, (3) leading the discussion on the CMIM’s coordination with bilateral and global support facilities, and (4) constant improvement of statistics.