Monetary and Currency Policy Management in Asia

Monetary and Currency Policy Management in Asia

ADBI series on Asian Economic Integration and Cooperation

Edited by Masahiro Kawai, Peter J. Morgan and Shinji Takagi

This book makes concrete macroeconomic policy recommendations for Asian economies aimed at minimizing the impacts of an economic and financial downturn, and setting the stage for an early return to sustainable growth. The focus is on short-term measures related to the cycle. The three main areas addressed are: monetary policy measures to achieve both macroeconomic and financial stability; exchange rate policy and foreign exchange reserve management, including the potential for regional exchange rate cooperation; and ways to ease the constraints on policy resulting from the so-called ‘impossible trinity’ of fixed exchange rates, open capital accounts and independent monetary policy.

Preface

Edited by Masahiro Kawai, Peter J. Morgan and Shinji Takagi

Subjects: asian studies, asian economics, economics and finance, asian economics, financial economics and regulation

Extract

In most Asian economies, the global financial crisis is increasingly becoming a thing of the past. By mid-2009 recovery was already evident in much of the region; in 2010 it was by far the fastest growing region of the world. Among the most impressive performers have been the dynamic economies of the People’s Republic of China and India, each of which registered growth approaching or exceeding 10 percent for the year. The performance of several other economies, notably Singapore and Taipei,China, was more impressive, and the Association of Southeast Asian Nations (ASEAN) member countries also registered healthy growth rates in 2010. While advanced economies remain sluggish, the Asian region is once again leading the way. The legacy of the crisis, however, will be long lasting. The diagnosis and the lessons of the crisis – including whether or not Asia’s policy mix had contributed to the crisis and how to reform the international financial architecture to prevent another crisis of the same kind – will no doubt be debated over the coming years. An important post-global financial crisis agenda for the Asian region involves building a consensus on appropriate macroeconomic policies over the medium term. Should a country pursue a more flexible exchange rate policy? Should it target both price and financial stability as objectives of monetary policy? Should it continue to accumulate foreign exchange reserves as an insurance against a sudden outflow of capital? These are some of the critical issues for the region’s policymakers. This volume brings together both theoretical...