Research On The Mechanism Of East Asia Regional Exchange Rate Coordination

According to coordinate fiscal and monetary policy, even and others macroeconomic policies, regional exchange rate coordination mechanism which set the range of exchange rate volatility and intervention mechanisms can maintain exchange rate stability within the region, so as to maintain the economic stability of the economies and promote the regional economy developments. As the development trend of international monetary system, regional monetary cooperation, which can effectively respond to the impact of international capital flows and avoid financial instability. However, stable and effective regional exchange rate coordination mechanism which can help to stable currency exchange rate and avoid competitive devaluation among the East Asia economies, even resist the brutal impact of international speculative capital. Therefore, it is an urgent requirement of the regional economic integration and regional monetary integration to explore the East Asian regional exchange rate coordination mechanism, which is a profound revelation of the East Asian currency crisis in East Asian economies and a key research project to achieve the regional monetary union that can not be erased.This article is mainly including five parts as following:Firstly, the introduction part which including the purpose and significance of the topic, research status, the content of the study, and the possible innovation and inadequacies of this article.Secondly, the theoretical basis for regional exchange rate coordination, which including optimum currency area theory, exchange rate target zone theory, spillover effects theory and game theory, even summarized to guide the furthering research for the next step.Thirdly, it is analysis of East Asian regional exchange rate coordination mechanism as well as the experience of enlightenment. The analysis conclusion, which explore to optimum currency area theory, theory of exchange rate target zone, overflow effects theory and so on, is that yen is difficult to play the role of the anchor currency in East Asia in the terms of dollar continuing to slide as well as the degree of internationalization of yen. However, as the case of China and East Asia economies are getting closer, China has become an important engine of economic growth in East Asian economies. At the same time, RMB is becoming more and more confident in the East Asia region under the gradual reform of RMB exchange rate system and the internationalization of RMB that steadily advance. It is suggest that RMB is the most potential anchor currency between regional monetary and financial cooperation in East Asia.Fourthly, it is to build the core of RMB in East Asia regional exchange rate coordination mechanism. It is a realistic choice which is put forward the East Asian regional exchange rate coordination mechanism that dominated RMB creatively under the circumstance of East Asian monetary cooperation, which combined with the RMB international development issues right now. A more realistic approach should be:within the East Asian region, the economy should get rid of the dependence of the dollar, and cross bilateral central rate should be determined as the key currency in RMB exchange rate, allowing the bilateral exchange rate stability, which allows the economy through policy adjustments and variety of actions to control the participating currencies against the RMB exchange rate fluctuations in order to maintain bilateral exchange rate stability. In addition, to promote monetary cooperation in East Asia as well as the formation of RMB as an dominating currency in East Asian exchange rate coordination mechanism, which should further strengthen economic and trade cooperation in East Asia region, accelerate RMB regionalization process under the opportunity of China-ASEAN Free Trade area construction, relax the control of the RMB convertible under capital accounts, further deepen the reform of the RMB exchange rate regime, and maintain the balance of international payments that avoiding the negative consequences of the "Triffin dilemma".Fifthly, it is about conclusions and policy recommendations. The empirical results as following:there is a certain relationship between RMB and ten countries or regions (Hong Kong and Tai Wan) exchange rate in East Asia. The ten countries of East Asia and regions as well as RMB, U. S. dollar, and the Euro first-order differential single whole based on the ADF test which time series data is relatively stable. In the East Asian economies, exchange rate fluctuations impacted by the RMB exchange rate. It is indicating that RMB plays an important role of "anchor currency" in exchange rate stability in East Asia and reducing the external exchange rate fluctuations as the growing strength of the Chinese economy and the rising share in world trade. However, there are some shortcomings and areas for in-depth study on this paper due to the auther’s research capacity and limited information. Specifically including:we also need for extensive research to know that whether the RMB can truly become the dominant currency in the East Asia firstly; we also use the theory of cost and benefit analysis to further analysis of the RMB affect the performance of the East Asia economic and financial stability as the dominant currency; we also need to further study the opportunities and challenges of our country and how to promote and respond to RMB regionalization.Regional monetary union or regional single currency has become the development trend of the contemporary era. China-ASEAN Free Area construction provides good conditions for the implementation of regional single currency, which greatly promoted the construction of the optimal currency area in East Asia. With the trade platform of China-ASEAN Free Trade Area, in order to make RMB become the East Asian dominant currency really which should accelerate RMB peripheral and regionalization, promote cross-border trade settlement in the Free Trade Area actively, make the RMB become a major reserve currency and investment of the East Asian economies, trade and the settlement currency of the circulation gradually, thereby securing the powerful features of RMB as a regional anchor currency.