Feasibility Study On Local Currencies In Regional Trade Settlement Among China,Japan And Korea

Japan, South Korea and China’s finance minister issued a joint statement, in theVietnamese capital of Hanoi, in May4th,2011. They have agreed to carry outfeasibility studies in using their own currency balance between import and exporttrade. From the Chiang Mai Initiative, quantities of actions were taken towards themonetary cooperation. However, it’s a new attempt to using local currency assettlement currency. This is a new attempt in the monetary cooperation for the threecountries.This article analyzes the policy of trade in local currency settlement from threeangles, the necessity, feasibility and influence. From necessity, the paper points outthis attempt is for risk resistant, regional economic trade development and copingwith global economic imbalances. The financial crisis started in2008led the fluctuantof the exchange rate between the three countries, which not only had great impact onthe foreign trade volume, also effect on the trilateral trade. A stable environment isneeded for economic development. There is a low connection of the regionalexchange rate, and this will have a bad effect on regional trade. To global economicimbalances, China, Japan and Korea are all victims. Nevertheless, they all contributeto the imbalances. So, the three countries should get together to adapt the needs.In the angle of feasibility, trade status, the trade of dependency, trade competitiveand complementary index and interaction effect in macroeconomic are analyzed.Trade is important to the three countries. And their economic developments all dependon trade deeply. At the same time, their trades depend on each other. Althoughdevelopment of trade competition has gradually begun to appear, a complementaryrelationship still exists. In the influence of macroeconomic, the trend of economicfluctuation of three countries becomes similar. Especially in the attack of globalfinancial crisis, the turning point of fluctuating period performs likely. But theinfluence between economic rate and the amount of trade is not significant. For the influence of this attempt, analysis is taken from two aspects. One is toregional monetary influence. It will improve the interaction effect on the exchangerate. It probably makes good effects on the establishment of regional currency. Andthat would have a positive impact on the international monetary system reform. Theother one is that it will contribute to the improvement of Chinese economic. First,yuan settlement is helpful to Chinese enterprises; secondly, it can improve economicsecurity; last, it will speed up the yuan regionalization, and even the pace ofinternationalization.This paper from the perspective of international economics policyimplementation feasibility, does not involve the scope of international politics.Although the policy from concept to implementation will have a lot of obstacles, butthe cooperation will promote the development of region economy, and gradually in abigger range have a good effect on.