Coping with a New Monetary Order after the Global Crisis
For quite a long time after the Second World War, East Asian countries did not consider the need for a regional economic and monetary order. The emergence of the GATT and the Bretton Woods systems caused this silence; they helped to stabilize the world economy and to ensure a stable growth in the region. Of particular importance was the Bretton Woods system, which was put forward by John Maynard Keynes of the UK and Harry Dexter White of the US. It established a world economy system based on a fixed exchange rate system with gold and the US dollar as the anchor for other currencies. The pegging of currencies to the US dollar in East Asia was still an unshakable principle even after the breakdown of the Bretton Woods system in 1973. However, increasing economic interdependency among countries in East Asia initiated some movements towards regionalism. As Katzenstein (2000) stated: ‘while the old regionalism emphasized autarchy and direct rule, the new one relies on interdependence and indirect rule.’ The financial crisis in 1997 was crucial, and sharply increased awareness on regional actions. Before looking at the needs for and conditions required for regional monetary and fi nancial integration, this chapter examines how the rapid growth and development of East Asian economies has deepened economic interdependency and how they have overcome crises and transformed economic structures in the region.
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