The Impact of Regionalism and the Role of the G20
Edited by Jehoon Park, T. J. Pempel and Geng Xiao
Chapter 8: The G20 and Asian Monetary Cooperation
8. The G20 and Asian monetary cooperation Woosik Moon1 8.1 INTRODUCTION Along with globalization, emerging countries have had to suffer from the whims of radical inflows and outflows of international capital. For instance, sudden capital outflows brought about a currency crisis in Asian countries in 1997. Bilateral swaps were not available; the International Monetary Fund (IMF) bailout was too stringent to help Asian countries to overcome the crisis. Realizing the need for an emergency fund, Asian countries set out to build the Chiang Mai Initiative (CMI). In 2008, Asian countries were hit by the global financial crisis which originated from the US subprime mortgage market collapse. They were victimized again, although they did not cause the crisis. The CMI was not yet ready. The IMF turned out to be inefficient and did not play any meaningful role to prevent and overcome the crisis. In the absence of an international lender of last resort, Korea, for instance, relied on a currency swap with the US, leading to the multilateralization of the CMI. It is obvious that such experiences made the creation of a global financial safety net and insurance against future crisis the top policy priorities of the Korean government. Indeed, the Korean government made best efforts to make these priorities a major part of the agenda in the G20 Seoul Summit held in November 2010. This chapter examines the strategies Korea should take to prevent financial crises and to contribute to the recovery of the world economy at global, regional...
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