Asian Monetary Integration
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Asian Monetary Integration

Coping with a New Monetary Order after the Global Crisis

Woosik Moon and Yeongseop Rhee

The authors examine the history, conditions and current efforts towards monetary integration in Asia and explore possible future paths, highlighting the roles and perspectives of East Asian countries in the integration process. They consider how East Asian economies could establish their own zone of monetary stability, and show that this stability cannot be separately addressed from the issues of economic growth and solidarity. Against this backdrop, the book tackles the issues of East Asian monetary integration underpinned by the broad framework of economic growth and solidarity.
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Chapter 10: The road towards monetary union

Woosik Moon and Yeongseop Rhee


In a world of financial integration, Asian countries will become increasingly vulnerable to capital flows, which can be caused by investors’ whims. International economic crises will continue to occur in the future as they have for centuries past. A single country under such circumstances can choose an exchange rate regime from only three possible options: free floating, complete peg or fixed system with capital controls. As examined in previous chapters, none of these systems is satisfactory. This suggests that a collective regional monetary arrangement should be opted for as an alternative to the deadlock of the individual choice of exchange rate regime. In fact, the need to foster a collective regional monetary arrangement in East Asia is very strong, because intraregional exchange rate stability among East Asian countries is essential for their economic prosperity. However, given that the economies of East Asian countries are very heterogeneous, and that almost all these countries moved to more flexible exchange rate systems after the currency crisis, collective monetary arrangements are still a long- term goal.

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