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Towards regional monetary cooperation in East Asia: lessons from other parts of the world
Author(s) -
Kawai Masahiro,
Takagi Shinji
Publication year - 2005
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.267
Subject(s) - east asia , economics , exchange rate , market liquidity , unit (ring theory) , international economics , chiang mai , unit of account , payment , mechanism (biology) , economic and monetary union , foreign exchange reserves , international trade , business , finance , european union , china , political science , philosophy , mathematics education , mathematics , epistemology , socioeconomics , law
This paper discusses regional monetary cooperation for East Asia, by drawing lessons from the European Payments Union, the CFA Franc Zone and the Arab Monetary Fund. Along with the well‐known experience of the European Monetary System, these experiences suggest that effective monetary cooperation should include: (1) a surveillance mechanism; (2) a regional financing facility; (3) a common unit of account; and (4) exchange rate coordination. In East Asia, the existing mechanisms of regional surveillance must be strengthened, and the liquidity support mechanism under the Chiang Mai Initiative must evolve into a common pool of foreign exchange reserves. Over the longer term, the region may need to create its own common unit of account and to develop a framework for exchange rate coordination. Copyright © 2005 John Wiley & Sons, Ltd.