The Post-crisis Era Of East Asian Currency Cooperation

Seriously hit by the1997-98financial crisis, East Asian countries realised the urgencyand importance of monetary cooperation, but their step was held back by difficulty infinding the right approach. This paper will mainly come in three parts. The first partwill discuss the respective practicality of the US dollar-dominated model, theJapanese Yen-dominated model and the RMB-dominated model in the East Asianregion in the light of the European experience in establishing a Single CurrencyMonetary Union, before reaching the conclusion, on the basis of theories and previouspractices of monetary cooperation between major countries, that China-Japanesemonetary cooperation is the best feasible approach. The second part will analyze theprogress of the RMB and Japanese Yen internationalization and some of the problemsthey face. Favorable conditions and obstacles to China-Japanese monetarycooperation will also be discussed. In the last part, policy recommendations will begiven as to how to overcome the obstacles and maintain China’s interest inChina-Japanese cooperation.