Research On East Asian Monetary Cooperation And The Status Of RMB

In the1990s, regional integration developed rapidly, especially the successful launch of the euro. It not only set a good example for regional integration, but also promoted its own integration progress. Compared to European integration, East Asia got less progress in this area. In1997, the Asian financial crisis which harmed Asian economy, inspired Asia to focus on regional monetary cooperation. With the global financial crisis in2008, East Asian countries are increasingly aware of serious flaws in the existing monetary cooperation. Under the new situation, is the East Asian monetary cooperation feasible? If possible, what mode of cooperation should we take? Which path can we promote it? In monetary cooperation of East Asia, what are the status of Yuan and Yen? Research on these issues could help promote monetary cooperation in East Asia. As a result, this article will concentrate on these issues.In this paper, Ⅰ analyze the feasibility of East Asian monetary cooperation according to optimal currency area theory. Then Ⅰ compare euro mode, the dollar mode and the multi-currency union mode so that Ⅰ could know which is the right mode for East Asia. On this basis, this paper presents East Asian Currency Cooperation evolution path. Ⅰ find that the existence of dominant currency can promote monetary cooperation. Thus we compared the two important countries——China and Japan. Finally, Ⅰ put forward some policy suggestions that may help monetary cooperation in East Asia.When Ⅰ study the feasibility of East Asian Monetary Cooperation, three indicators were selected from the perspective of economics. These are the level of economic development, inflation similarity and economic openness similarity. It has shown that East Asian did not meet the standards of optimal currency area. However, as optimal currency area criteria is endogenous, primary work for monetary cooperation is necessary. In the comparison of euro mode, dollar mode and multi-currency union mode, combined with the current development in East Asia, Ⅰ find dollar mode is more suitable in East Asia. On this basis, this paper propose monetary cooperation path in East Asia. However it is worth noting the lack of dominant currency like Dollar which greatly promote North American integration. So it is imperative to establish the dominant currency in East Asia. It is Yuan and Yen that may have the capability to take this great responsibility. Through my comparison, I found that Yuan is more suitable. I then further analyze the potential of Yuan. At last, policy recommendations are proposed to help Yuan to become regional dominant currency.The study on Monetary Cooperation, helps the building regional exchange rate system which is corresponding with region’s economic interests; helps to coordinate monetary and financial policies together to resist the economic crisis; helps to create its own currency history in East Asia cooperation, improve and supply monetary cooperation Theory. Thus this study is significant.In this paper, existing researches are mostly on needs, feasibility and paths on monetary cooperation in East Asia.Based on all these, I innovatively choose the financial crisis as the background and make a comparison of renminbi and Yen about who can act as a dominant currency in Asia. I make a further analysis of renminbi and clarify the status of the renminbi in the East Asian region.However, due to the limited ability of the author, in the feasibility analysis of monetary cooperation in East Asia, there is no use of econometric models to give a fuller argument. The cooperation path may also not that comprehensive. These will be my future direction of research effort.