Edited by Koichi Hamada, Beate Reszat and Ulrich Volz
Introduction: Prospects for Monetary and Financial Integration in East Asia – Dreams and Dilemmas
Introduction: prospects for monetary and financial integration in East Asia— dreams and dilemmas Koichi Hamada, Beate Reszat, and Ulrich Volz The Asian financial crisis of 1997–98 fundamentally changed East Asia’s perspective on economic regionalism and sparked great political interest in monetary and financial cooperation and integration in the region. The crisis revealed the fragility of the region’s prevailing exchange rate arrangements and highlighted the need for a strengthening of the regional financial architecture. Since the crisis, there has been a proliferation of proposals for fostering East Asian monetary and financial integration. Regional cooperation in the field of money and finance already takes place through the Association of Southeast Asian Nations (ASEAN) surveillance process, the Chiang Mai Initiative for the creation of bilateral short-term financing facilities by the ASEAN13 countries (ASEAN plus China, Japan, and Korea), and various initiatives to foster the development of regional security markets. There is also a serious debate about establishing a regional exchange rate arrangement or even a common East Asian currency in the longer term. In December 2005, the Asian Development Bank announced its intention to create an Asian currency unit (ACU) comprising a basket of East Asian currencies akin to the European currency unit (ECU), which evolved into the euro. Although this initiative has not come to fruition, a regional currency unit is now being studied by the ASEAN13 countries. Particularly remarkable is the involvement of China, which has demonstrated an increasing willingness to accept responsibility for the economic progress of the region...