Analysis Of Monetary Cooperation In East Asia

The Southeast Asian financial crisis in the late 1990s is the unforgettable lesson for the countries in East Asia.Since then, they have learnt that under the circumstance of globalization, any country could not withstand the shock of international financial crisis on its own. To some extent, Regional Monetary Cooperation could resist or even withstand the financial crisis. Therefore, to promote Monetary Cooperation in East Asia has been the common aspiration of each country and economic community.Thus the path towards it is embarked on. Especially after the global financial crisis in 2008, countries and regions in East Asia have significantly accelerated the pace of monetary cooperation.As more and more focus are taken on the research of Regional Monetary Cooperation in East Asia by increasing domestic and international scholars, this paper selects the Regional Monetary Cooperation in East Asia as the research object which has the practical significance pertinently with the time spirit. Based on the analysis of the necessity of Regional Monetary Cooperation, the current situation of monetary cooperation and the development trend of Monetary Cooperation in East Asia after the crisis, a more comprehensive and systematic analysis of regional monetary cooperation in East Asia is presented in this paper. Besides, it is inspired that we can get a reflection about China's participation in Regional Monetary Cooperation in East Asia and put forward some countermeasures and suggestions to China.This article is divided into five chapters including analysis and explainations.This paper starts with the general introduction to the concept and relative theories concerning Monetary Cooperation, then goes on with analysis of three forms of current cooperation models and practice. Regional Monetary Cooperation is a kind of common activity between countries in the same region.It is also a kind of policy coordination and monetary cooperation to establish a relatively stable currency region, to prevent the shock of speculative funds, and to be against the monetary crisis. The ultimate goal of Monetary Cooperation is to build currency management institution unitedly in a region, to issue a consolidate currency, to implement monetary policy, to achieve a relatively fixed exchange rate within the region and to ensure financial stability in a region. Themre are three existing models of Regional Monetary Cooperation, the"Single-Currency Monetary Union", the"Leading-Currency Regionally Monetary Union"and the"Multiple-Currency Monetary Union". At the same time, the typical current practice of Regional Monetary Cooperation, including the euro area, the dollarization in Latin America, the franc zone in Africa are analyzed in this page.And finally the opinion that the"Multiple-Currency Monetary Union"could be the most possible model for the Monetary Cooperation in East Asia is proposed. This section also cites the necessity theory of Regional Monetary Cooperation to explain the traditional theory and the development of optimum currency areas. This section is the theoretical basis of the full article.Chapter two, from the comprehensive point of view, focuses on the necessity of Monetary Cooperation and the current situation in East Asia . First of all, it is the common requirement of the development of international monetary system. After the collapse of the Bretton Woods system, Jamaica System breaks the framework that the international monetary system was dominated by the dollar system. As a result, the international currency came into the era of diversity. However, the U.S. dollar still plays an important role in the international monetary system.In 1990s, monetary regionalization trend and a number of regional monetary organization appeared. The awareness that the international monetary system must be reformed and the U.S. dollar was no longer the sole world currency arised after the international financial crisis. People also had the consiousness that to some extent, the regionalization of the international currency can be the most effective way to resolve the inherent contradictions in the international monetary system at this stage. Secondly, it is the demand of the regional economic cooperation. With constantly deepening of economic globalization and regionalization, the interdependence within East Asia are increasingly intensified. It is required that the monetary cooperation in East Asia are accelerated to reduce transaction costs. Thirdly, it is a request for exchange rate regime in countries in East Asia. Over-reliance on U.S. dollar exchange rate arrangements is a threat to stable economic growth in East Asia. That's the reason why the East Asian economies have been caught in a dilemma of choosing exchange rate system. And the Regional Monetary Cooperation in East Asia is conducive to selectthe optimal exchange rate regime to prevent the financial crisis in East Asia.The Monetary Cooperation started from the Southeast Asian financial crisis in 1997.Then, the signing and implementation of the "Chiang Mai Initiative", the establishment of information exchange and monitoring mechanisms, the launch of the Asian bond market. With the effection of the international financial crisis and under the "10 +3" framework, the currency exchange mechanism came into being and expanded gradually. With the multilateralism of the "Chiang Mai Initiative", the Asian foreign exchange reserves started and scaled to 120 billion yuan, and reached an agreement on the proportion of sharing for every country and the capital operational management.Chapter three analyzes its main problems and trends after financial crisis. Under the current international financial crisis, we has made significant progress on regional monetary cooperation in East Asia. But there are still many problems existed in Regional Monetary Cooperation in East Asia, such as lack of formal institutional arrangements, overly focus on the cooperation mechanisms of financial crisis, the non-realization of independent operations and the lack of exchange rate cooperation mechanisms which are the main problems that are required to be resolve urgently. The ultimate goal of the Regional Monetary Cooperation in East Asia is to establish a uniform currency area, but it is a long gradually developmental process. And we need to take planned steps.Chapter four elaborates the model that should be taken that leads to the Single Currency Area in East Asia, and explains the actual implementation paths in details. And here it is analysized that it's impossible for East Asia to adopt the Single Currency Area. The Leading Currency Regionally Model is also impracticable. But with the Asian characteristics, the cooperation model of the"Multiple-Monetary Union"as the main mode with the euro-based model and dollar-based model gradually fits to the situation in East Asia. This model makes Regional Monetary Cooperation in East Asia to be a long gradually dynamic process which can be divided into three projective phases specifically: the short-term objective is the establishment of regional crisis rescue agencies; the mid-term objective is the foundation of the East Asian currency linkage mechanism; the long-term objective is the achievement of Single Currency Area in East Asia.At last, this paper ends up with the analysis of important role that China plays in Monetary Cooperation in East Asia and how to decide its policies toward it. It is suggested that, as the most important and powerful developing country in this area, China should play a key role in this process, and gives the impetus to Monetary Cooperation in East Asia, and regionalization and globalization of RMB as well. What's more, some suggestions are presented. Firstly, to strengthen the policy coordination within countries in East Asia. Secondly, to enhance the competence ability of domestic products and to impulse the deepening of the economic cooperation. Thirdly, to establish a consummate and open financial market. Fourthly, to reinforce the economic integration in the two shores and four regions. Finally, to promote the regionalization and internationalization of the RMB actively.