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Strengthening Regional Financial Cooperation in East Asia

Author

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  • Haruhiko Kuroda
  • Masahiro Kawai

Abstract

The 1997–98 financial crisis prompted East Asian economies to realise the potential benefits of installing stronger cooperative mechanisms for crisis prevention, management and resolution. This paper argues that a regional financial architecture needs to be firmly established in East Asia, outlines recent developments in financial cooperation in the region, and provides possible directions for the future. We recommend a more effective surveillance process and consider the option of creating a common pool of foreign exchange reserves to allow flexible financial support at times of crises and contagion while minimising the problem of moral hazard. The arrangement must be consistent with the global framework; in particular, it must involve international creditors from outside the region for crisis management and resolution. We suggest that exchange rate regime choice should be coordinated at the regional level, with a long-term vision of regional monetary integration.

Suggested Citation

  • Haruhiko Kuroda & Masahiro Kawai, 2002. "Strengthening Regional Financial Cooperation in East Asia," Asia Pacific Economic Papers 332, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:csg:ajrcau:332
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    File URL: https://crawford.anu.edu.au/pdf/pep/pep-332.pdf
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    Citations

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    Cited by:

    1. Abhijit Sen Gupta, 2015. "Extent Of Exchange Rate Coordination In Asia," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(02), pages 1-25.
    2. Kawai, Masahiro, 2015. "From the Chiang Mai Initiative to an Asian Monetary Fund," ADBI Working Papers 527, Asian Development Bank Institute.
    3. Masahiro Kawai, 2010. "Reform Of The International Financial Architecture: An Asian Perspective," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 55(01), pages 207-242.
    4. C. Randall Henning, 2011. "Coordinating Regional and Multilateral Financial Institutions," Working Paper Series WP11-9, Peterson Institute for International Economics.
    5. Gupta, Abhijit Sen, 2012. "Exchange Rate Coordination in Asia: Evidence using the Asian Currency Unit," ADBI Working Papers 356, Asian Development Bank Institute.
    6. Abhijit Sen Gupta, 2010. "Prospects for a Single Asian Currency," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 6(5), pages 873-892, June.
    7. Yap, Josef T., 2007. "Ten Years After: Financial Crisis Redux or Constructive Regional Financial and Monetary Cooperation?," Discussion Papers DP 2007-05, Philippine Institute for Development Studies.
    8. Hamilton-Hart, Natasha, 2011. "Distribution, Domestic Politics and Monetary Cooperation in East Asia," ADBI Working Papers 332, Asian Development Bank Institute.
    9. Shimizu, Junko & Ogawa, Eiji, 2005. "Risk properties of AMU denominated Asian bonds," Journal of Asian Economics, Elsevier, vol. 16(4), pages 590-611, August.
    10. Masahiro Kawai & Shinji Takagi, 2005. "Towards regional monetary cooperation in East Asia: lessons from other parts of the world," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 10(2), pages 97-116.
    11. Marie Coiffard & Laëtitia Guilhot, 2012. "Migrations internationales : la mobilité des Hommes, facteur d'intégration régionale en Asie Orientale ?," Post-Print halshs-00755102, HAL.
    12. Robert-Paul Berben & Jan Marc Berk, 2002. "Requirements for successful currency regimes: the Dutch and Thai experiences," MEB Series (discontinued) 2002-16, Netherlands Central Bank, Monetary and Economic Policy Department.
    13. Natasha Hamilton-Hart, 2012. "Regional and multi-level governance: East Asian leadership after the global financial crisis," Asia Europe Journal, Springer, vol. 9(2), pages 237-254, March.
    14. Kawai, Masahiro, 2005. "East Asian economic regionalism: progress and challenges," Journal of Asian Economics, Elsevier, vol. 16(1), pages 29-55, February.
    15. Khan, Haider, 2011. "Constructing Global Governance of Global Finance: Towards a Hybrid Global Financial Architecture," MPRA Paper 40249, University Library of Munich, Germany, revised Jan 2012.
    16. Girardin Eric, 2009. "Regional Monetary Units for East Asia: Lessons from Europe," Working Papers id:1972, eSocialSciences.
    17. William H. Branson & Conor N. Healy, 2009. "Monetary and Exchange Rate Policy Coordination in ASEAN+1," Chapters, in: Koichi Hamada & Beate Reszat & Ulrich Volz (ed.), Towards Monetary and Financial Integration in East Asia, chapter 9, Edward Elgar Publishing.
    18. Abhijit Sen Gupta & Amitendu Palit, 2008. "Feasibility of an Asian Currency Unit," Macroeconomics Working Papers 22164, East Asian Bureau of Economic Research.
    19. Peter B. Kenen & Ellen E. Meade, 2006. "Monetary integration in East Asia," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.
    20. Chin, Gregory, 2012. "Responding to the Global Financial Crisis: The Evolution of Asian Regionalism and Economic Globalization," ADBI Working Papers 343, Asian Development Bank Institute.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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