The East Asian Monetary Co-operation: Feasibility And Arrangement

Theory of Optimum Currency Areas , the most influential one in the study of Regional Monetary Cooperation, was first put forward by the American economist Robert Mundell in 1961.This theory comes from the debate of fixed exchange rates and floating exchange rate aegis in 1960s . Then, western economists and scholars in this field have had extensive discussions and further study.The euro was the result of theory of regional monetary cooperation.Its success had produced a far-reaching impact in the whole world .It not only increased the rest of the world's confidence in regional monetary cooperation, but also pushed the study of regional monetary cooperation both in theory and practice into a new climax.Geographically, there are three major economic regions: North America, Europe and Asia in the world.Considering the comparison of GDP,Asia is ranked at first,however ,if we exame the financial strength,asia's financial lever is the weakest . At present,all countries are working to enhance its international status of currency,in this context, North America and European Union take the lead to set up their own monetary system, the U.S. dollar system and the euro system ,so the two major economic zones have there own regional monetary.From his partners' pressure and impact,Asia need to accelerate the pace of monetary cooperation to build the asia Regional monetary.1997 Southeast Asian financial crisis brought very serious disaster in economies. The East Asian countries reflect on their own domestic economic problems and they increasingly recognize the importance of currencies cooperation between the governments .Therefore, after the financial crisis, East Asian countries have the more positive attitude to the region's monetary co-operation and monetary cooperation begin to receive more attention, then the East Asian monetary co-operation launched.This article analyze some of the issues on monetary cooperation in East Asia can be divided into three parts:Part I: introduction, including research background and research significance. From the point of existing shortcomings of the international monetary system and its reform ideas to analyze why did East Asian countries choose regional monetary cooperation and what benefits to East Asia countries and world monetary system .Part II: from the second to sixth chapter. The second chapter mainly introduce the theoretical foundation - the theory of Optimum Currency Areas, including six single indicator of the optimal currency area theory, Krugman GG-LL model and the endogenous theory of optimum currency areas. Chapter 3 on the basis of the theory in first chapter , combination of the actual situation of the East Asian countries ,focus on the study of the feasibility of establishing optimal currency area in East Asia. Chapter 4 deals with the status of East Asian monetary cooperation and the constraints. Chapter 5 sets out the path of the East Asian monetary cooperation, it mainly comprises the initial stage, intermediate stage and advanced stage. Chapter 6 analyzes the China's status and strategic choice in the East Asian monetary cooperation.Part III: Conclusion. This part arranges some conclusions and insights.The main contribution of this paper are these: 1,analyze the East Asian countries' realistic choice in today's world. As the international monetary system (Jamaica system ) is difficult to adapt to the economic develop due to some defects , the reform is inevitable, but beyond national boundaries to create a perfect world monetary system need quite a long time and difficult to achieve. The realistic choice is to actively promote East Asian monetary cooperation, to establish the optimal currency area in East Asia.2,According to the relevant indicators of establishment of optimal currency area, using the latest economic data and information, demonstrate the feasibility of the establishment of the East Asian optimum currency area , and work out these conclusion: Using these three indicators(McKinnon's degree of economy development, Haberler and Fleming's inflation, and degree of policy integration) to measure the feasibility ,East Asian countries is suitable for the establishment of optimal currency area. Of course, the East Asian region and the EU have a considerable gap in the economic development level, financial integration and the political will. Therefore, overall speaking, the establishment of optimal currency area in East Asia has some viability, but still far away from the true sense of the conditions of optimum currency areas.3,In drawing on the results of previous studies and according to the development of economic and monetary cooperation in East Asian , I proposed the path of the East Asian monetary cooperation arrangements and the keys in every stages .