Coping with a New Monetary Order after the Global Crisis
When we look at the history of East Asia, we can find two interesting experiences of currency blocs in the region. One was a currency bloc linked by silver currencies, which was naturally formed by economic forces before the twentieth century. The other one was the yen bloc, implemented by Japan during the period 1937–45. These experiences provide very contrasting cases of how the process of monetary integration can be propelled to move forward or how the process can disintegrate. This chapter fi rst looks at a natural currency zone in East Asia with the silver dollar as a unit of account before the twentieth century. Asia was part of a large monetary union linked by silver currencies even before the nineteenth century. The silver dollars were supplied largely from the Americas and therefore Spanish and Mexican dollars were the most common units of account, with their standardized form and weight. They soon replaced the Chinese tael as the unit of account in the East Asian monetary system, and were given the name ‘yuan’ (according to Chinese pronunciation), ‘yen’ (Japanese) and ‘won’ (Korean). They circulated as the main media of exchange in all other parts of Asia. Thus, East Asia had already formed a natural currency zone with the silver dollar as a unit of account. These silver dollars were commodity monies, the value of the coins being determined by their intrinsic metallic value.
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