About Exchange Rate Policy Coordination In East Asia

The quickening steps of globalization unveil unprecedented opportunities and challenge as well to East Asian countries. Against the background of globalization, economic crisis originating from one country may be transmitted to others in no time and bring severe damages to their economies. Economies of East Asian countries, characterized by their uniqueness and complexity, are more prone to the impacts of world economic turbulences. Besides, ever since 1990's, as one of the consequences of globalization, the imbalanced development of world economy has attracted more and more attention. And the devaluation of the US dollar, one of the results of the imbalanced development of world economy, has pushed East Asian countries into a dilemma.Therefore, today, when globalization is developing at an ever-faster speed, it becomes more urgent for East Asian countries to coordinate their exchange rate policies for the purpose of coping with possible future economic crisis and the aggravated situation of imbalanced development of world economy. This thesis, employing both quantitative and qualitative research methodologies, tries to prove that it is both necessary and feasible for East Asian countries to coordinate their exchange rate policies. It points out that the key to East Asian countries'exchange rate policy coordination is to overcome the over-dependence on US dollar and the approaches include China's reformation on its exchange rate system, Japan's efforts of internationalizing yen and other East Asian countries'construction of domestic and regional bond markets. Based on the experience of Europe's exchange rate coordination, this thesis demonstrates that the process of East Asian countries'coordination of exchange rate policies may be hindered by the following factors: the US interference, the imbalanced development of East Asian countries'economies and their weak willingness to cooperate. Finally this thesis suggests that East Asian countries should enhance cooperation within their region through various channels and foster mutual understanding and trust. Meanwhile, they should take gradual steps to adjust their exchange rate systems to a more flexible direction.