Theory Of Monetary Integration, And Explore The Theory Of Monetary Integration In East Asia

The dissertation makes a full review of the development, main arguments and influences of the theory of optimum currency areas (OCA theory), discusses the process of European monetary integration and points out its influences and experiences, explore the necessity, costs and benefits, possible forms and process of East Asian monetary integration and makes some suggestions about China's relevant strategies and policies.Chapter One makes a full review of the development, main arguments and influences of the theory of optimum currency areas. The dissertation first tries to give an exact definition of monetary integration, points out its differences with other related concepts, such as economic cooperation, financial cooperation, monetary cooperation, economic integration, financial integration, economic union, monetary union and optimum currency areas. There are three main phases in the development of the theory of optimum currency areas. (1) early (conventional) theories of optimum currency areas; (2) revival of theory of optimum currency areas in the mid-80s and early 90s; (3) recent development of theory of optimum currency areas. In the end of chapter one, we discuss the implications of OCA theory, including its influences on economic theories and practices of monetary integration in various parts of the world.Chapter two focuses on discussing the costs and benefits of a common currency. The theoretical foundation of monetary integration is the OCA theories. The OCA theories have evolved to focus on evaluating the costs and benefits of adopting a common currency. This analysis can be applied to all processes of monetary integration and all forms of monetary unions, such as common pegs, currency board, dollarization, common currency and related coordination of economic and monetary policies. Common currency or monetary union has some important benefits, such as reduction or elimination of transaction costs and forward covering costs related to the exchange of national monies, promotion of economic integration and economic growth, and saving of foreign reserves. The main costs are the loss of monetary policy independency and the loss of exchange rate instrument.Chapter Three makes a review of the process of the European monetary integration, summarizes European experiences and lessons, and points out its influences. The successful experiences of the European monetary integration can be a good example for the practices of monetary integration in various parts of the world, particularly in East Asia. The successful experiences of the European monetary integration are mainly as follows. The success of monetary integration depends on economic factors, but more on political factors. The process is one of gradualism and convergence. Mature institutions for cooperation must be established. Sovereign nations can co-exist with a monetary union.Chapter Four explores and discusses the necessity, costs and benefits, possible forms and process of East Asian monetary integration, makes some suggestions about China's relevant roles and policies.Now it is generally realized in East Asia that strengthening and promoting regional monetary cooperation and integration are vital for preventing and overcoming monetary or financial crisis, saving foreign exchange reserves, promoting regional economic integration, and maintaining sustained and stable economic growth in East Asia.However, due to the enormous disparities in levels of economic development, low level ofpolicy coordination in East Asian economies, and the political factors inherited from the Second World War, East Asia as a whole currently does not satisfy the preconditions of a complete monetary union. A complete monetary union can only be a long-term goal for East Asia. However, East Asia can now adopt some incomplete forms of monetary union, such as common peg system. As economic cooperation and integration in East Asia increases, the region can adopt some higher forms of monetary union.In the beginning, an East Asian monetary union will be a common s...