Based On The Theory Of Optimum Currency Areas, The East Asian Monetary Cooperation Problem Research

With the strengthening of the worldwide trade and financial linkages, the process of regional economic integration is accelerating; regional monetary cooperation is gradually put on the agenda. In recent years, the cooperation of intra-regional trade and investment in East Asia develops rapidly, monetary cooperation attracts more and more attention with the regional economy’s rapid development, and most of the countries have reached a consensus on the necessity of monetary cooperation.Research on East Asian monetary cooperation should be based on theory of Optimum Currency Area pursuant to which the standard system for evaluating the economic base of the East Asian regional monetary cooperation is established. Optimum Currency Area is a zone adopting a single currency or several currencies, and in this zone exchange rate is permanently fixed and keeps floating to the external countries; this concept is first proposed by U.S. economist Robert Mundell. Theory of Optimum Currency Area has developed and improved continuously in the practice and application, and gradually formed a complete theoretical system. It lays the theoretical foundation for regional monetary cooperation and has a guiding role in the monetary cooperation of East Asia.From the angle of theory of Optimum Currency Area combined with monetary cooperation in East Asia, this paper analyzes the satisfaction of the Optimum Currency Area standard in East Asia, including five criteria:the mobility of production factors, economic openness, product diversification, financial integration, and policy integration. Chapter one presents the research background and the theoretical and practical significance, lists systematically the former research on East Asian monetary cooperation at home and abroad, and gives the whole structure of this paper. Chapter two presents the theory of Optimum Currency Area, illustrates the early and latest development of this theory and puts forward criteria of Optimum Currency Area for East Asia. Chapter three adopts criteria of Optimum Currency Area to analyze the feasibility of monetary cooperation in East Asia. Through a large number of data analysis, I get that the conditions of East Asia setting up an Optimum Currency Area are initially available. There are individual differences in several criteria, but these criteria will be constantly fitting in the trend. Chapter four summarizes the process and the existing achievement of monetary cooperation in East Asia. The process is relatively slow, because there are constraints such as the great differences among countries, the lack of a solid political foundation, the lack of core country and core currency. End of this paper compares the three modes of regional monetary cooperation, analyzes the applicability of three models combined with the specific situation in the East Asian region. On the basis of previous analysis, I provide the main countermeasures on the monetary cooperation in East Asia.