EIJS Working Papers Series
Prospects for Asian Monetary Cooperation After the Asian Financial Crisis. Pipedream or Possible Reality?
Abstract: This paper re-assesses the prospects for greater monetary
integration in Asia in the wake of the Asian financial crisis of 1997. The
Asian crisis highlighted the absence of well-developed supranational
institutions in Asia to provide early warning signals of impending currency
or balance of payments problems, access to unconditional funds to cope with
financial problems, and a common defensive mechanism to deal with
speculative movements in exchange rates. Since 1997 there have been a
number of initiatives to enhance monetary cooperation in the region
including a Japanese proposal for an Asian Monetary Fund, the Chiang Mai
Initiative at the Asean+3 meeting in May 2000, the Kobe Research Project,
and the currency swap agreements and surveillance machinery initiated at
the Asian Development Bank Meeting in Honolulu in May 2001. We find that
whilst a common monetary and exchange rate policy in EA is unlikely in the
foreseeable future, until the net economic benefits of giving up unilateral
exchange rate regimes are more apparent, a good case can be made for
placing responsibility for the functions of macroeconomic surveillance and
regional resource pooling within a permanent institution which could evolve
over time into a fully-fledged Asian Monetary Fund with its own
Asia-specific rules on conditionality.
Keywords: Optimum currency area; Asian Monetary Fund; Exchange rates; ASEAN; Monetary cooperation; (follow links to similar papers)
JEL-Codes: F31; F33; F36; (follow links to similar papers)
56 pages, August 1, 2002
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