Coping with a New Monetary Order after the Global Crisis
Chapter 7: The beginning of monetary cooperation in East Asia and the Chiang Mai Initiative
The road towards Asian monetary cooperation started with the outbreak of the Asian currency crisis in 1997. Indeed, the Asian currency crisis provided a new opportunity to discuss a permanent monetary institution within Asia; in this context the idea of an Asian Monetary Fund (AMF) was born. Japan proposed it fi rst. Fearing that the yen would drop to a junior international currency status after the dollar and the euro, Japan had already tried to develop the yen as an international currency. The crisis, however, made this Japanese eff ort redundant. Amid the rapid decline of Japanese infl uence on monetary and fi nancial matters in Asia, the establishment of an AMF emerged as an urgent issue for Japan. Again, this idea encountered strong opposition from the US and the IMF. Asian countries had to take a long detour. First, they established as the main vehicle for regional economic and monetary cooperation the ASEAN+3 framework, which only included Asian countries; on the basis of this framework, they launched the Chiang Mai Initiative (CMI) for their fi nancial self- help. Through the CMI process, the facility for the emergency provision of funds continued to expand, and the operational procedure improved over time, leading to the development of The Chiang Mai Initiative Mutualisation (CMIM) agreement and an independent surveillance unit. The eruption of the global fi nancial crisis in 2008 was another factor that helped to strengthen this development. Asian countries are now ready to see an AMF become reality.
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