The Regional Financial Deepening In East Asia: The Road From Financial Cooperation To Monetary Cooperation

Monetary and financial cooperation is an important part of regional economic cooperation. Promoting monetary and financial cooperation has great significance in economic development and stability in East Asia. The regional financial cooperation in East Asia has made some achievements since the financial crisis in 1997. Different from other scholar's research on exchange rate coordination, monetary cooperation in East Asia in the future, this thesis focuses on the condition and roadmap of regional cooperation from financial to monetary cooperation.Both on theoretical and practical perspectives, the criterion of international financial integration is not a necessary and sufficient one for OCA. This criterion need to be enriched. The criterion of regional financial deepening is a more appropriate one. There are three indicators to measure the extent of regional financial deepening: total regional external financial assets and liabilities, the proportion of the total regional external financial assets and liabilities that is owned by the region, the convergence of the regional financial structure .The reality in East Asia is that the extent of regional financial deepening is quite low, which implies that the financial market condition is not quite ready for monetary cooperation in East Asia. East Asia should first achieve regional financial deepening, and then engage in monetary cooperation.In the process of regional cooperation there is a proposition that East Asia engage in monetary cooperation under the condition that the financial cooperation is not sufficient enough. But the road of so-called"monetary cooperation before financial cooperation"is only a possibility in theory. It is not feasible in East Asia.The task of regional financial deepening in East Asia includes intensifying the financial institutional in the region, promoting financial markets development, and intensifying regional cooperation and harmonizing in financial sector development. Regional financial deepening is a building block for East Asia to develop from financial cooperation to monetary cooperation.