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Whither Financial and Monetary Integration in East Asia?

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  • Yung Chul Park

    (Center for International Commerce and Finance, Graduate School of International Studies, Seoul National University San 56-1, Sillim-dong Gwanak-gu, Seoul 151-742, Korea)

Abstract

The 1997 Asian financial crisis has helped to further regional financial and monetary cooperation. The purpose of this paper is to examine these efforts, their recent developments, and to predict the prospects of such cooperation. In order to deepen financial and monetary integration, the region must overcome several difficulties. The region's appetite for financial market liberalization has been dampened by the crisis and countries are building up foreign exchange reserves instead of reforming domestic financial markets. The diverse structures and development levels of the financial sector among the members is another obstacle. The fact that Japan does not have strong incentives for monetary integration and that the business cycle of member countries is not synchronized are obstacles to monetary integration. Also, the proliferation of FTAs has turned attention away from regional cooperation. Finally regional cooperation needs a leader that can bring impetus to institution building. As the two possible candidates, China and Japan, have been competitors rather than collaborators, the most realistic scenario for regional cooperation is that the ASEAN + 3 countries will muddle through and that the process will be painstakingly slow. (c) 2007 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Suggested Citation

  • Yung Chul Park, 2007. "Whither Financial and Monetary Integration in East Asia?," Asian Economic Papers, MIT Press, vol. 6(3), pages 95-128, Fall.
    • Handle: RePEc:tpr:asiaec:v:6:y:2007:i:3:p:95-128
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    Cited by:

    1. Yung Chul Park, 2010. "RMB Internationalization and Its Implications for Financial and Monetary Cooperation in East Asia," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(2), pages 1-21, March.
    2. Claus, Edda & Lucey, Brian M., 2012. "Equity market integration in the Asia Pacific region: Evidence from discount factors," Research in International Business and Finance, Elsevier, vol. 26(2), pages 137-163.
    3. Hongjun Zeng & Abdullahi D. Ahmed, 2022. "Market integration and volatility spillover across major East Asian stock and Bitcoin markets: an empirical assessment," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 19(4), pages 772-802, August.
    4. Dayong Zhang & Wanli Zhao & Fei Wu & Qiang Ji, 2020. "Financial Integration in Asia: A Systemic View on Currency Markets," Asian Economic Papers, MIT Press, vol. 19(2), pages 41-58, Summer.
    5. Suk Hyun & James F. Paradise, 2020. "Toward an Asian Monetary Fund: Ideas for Transition," Asian Economic Papers, MIT Press, vol. 19(2), pages 65-77, Summer.
    6. Berdiev, Aziz N. & Chang, Chun-Ping, 2015. "Business cycle synchronization in Asia-Pacific: New evidence from wavelet analysis," Journal of Asian Economics, Elsevier, vol. 37(C), pages 20-33.

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