Research On Regional Exchange Rate Coordination Of East Asia

In 2000, The Nobel economic prize winner Professor Mundell once predicated that three big monetary areas would appear in the future 10 years: An Euro area, US dollar area and the Asian monetary area, namely"Three Islands of Stability"will become the basic frame of the international currency system in the future. At present, European Union has formed its own monetary area, and the exchange rate coordination of North America trade area is in motion, After East Asia crisis, the monetary cooperation in East Asia has achieved much progress and accomplishment, As the core phase of East Asia Money, East Asia exchange rate coordination is lagged. Though it's basically feasible to establish the mechanism of East Asia exchange rate coordination under the objective economic conditions, the task of establishing the mechanism of East Asia exchange rate coordination is rather tough, due to lots of obstacles in East Asia exchange rate coordination, including the absence of strong supervisory mechanism, diversification of regional exchange rate arrangement and the base of coordination, etc.The East Asia regional exchange rate coordination route refers to connotation, target, the exchange rate coordination route and the member selection, academicians have proposed many models of East Asia exchange rate coordination, Which have both advantages and disadvantages in some extent. But comparatively speaking, monetary basket is more applicable to the present East Asia. According to the actual circumstances of East Asia, there shall be four phases to establish this mechanism: firstly, in the short term, East Asia shall strengthen the adjustment of regional exchange rate policies; secondly, in the interim, sub-regional pegging exchange system shall be set up; thirdly, in the long term, monetary integrating in every sub-region will be realized; fourthly, fixed exchange rate area of East Asia can be established step by step, then regional unified money will come into being.Establishment of the mechanism of East Asia exchange rate coordination will bring many benefits to the region of East Asia, including avoiding competitive depreciation of regional currencies, reducing the costs of trade and investment in the region, withstanding the impacts from international speculative funds, and so on. For China, there are both advantages and disadvantages in participating the mechanism of East Asia exchange rate coordination. And the advantages lie in its conduciveness to the development of trade, the stability of macro-finance in China and confronting the pressure of RMB appreciation, etc., with the disadvantages in less independence in monetary policies, higher costs of RMB management, etc. As a large country in East Asia, China shall be more active to participate in the establishment of the mechanism of East Asia exchange rate coordination.