An Analysis On The Optimal Currency Area Index Of The Monetary Cooperation Between China,Japan And Korea

After the global financial crisis, due to the the United States issued a large number of currencies to save the economy, making the US dollar continued to depreciate. The sharp depreciation of US dollar has led to a sharp decline in the US dollar reserves held by various countries, which has led to a serious impact on the economies of all countries. To change the current situation, the primary choice in the world is to make the euro become a currency that goes hand in hand with the US dollar. Because of the European debt crisis, the euro gradually fell into crisis. Then they focused on the RMB, this coincides with the RMB internationalization strategy.For the RMB, the primary task of the RMB internationalization is to achieve the RMB regionalization, and RMB regionalization can be achieved through regional monetary cooperation. Mundell once predicted that the future will appear three currency stable region, that is US dollar, Asian currency unit and the euro, but Asia needs a common currency, rather than a single currency. Therefore, it is of practical significance to study the feasibility of monetary cooperation among China, Japan and South Korea.In this context, this article first combs the monetary cooperation projects that have been carried out or will be carried out between three countries. At present,including the currency swaps among China, Japan and South Korea; the East Asian foreign exchange reserves; the free trade zone in China ,Japan and South Korea; the currency settlement among China, Japan and South Korea. The currency swap and the East Asian foreign exchange reserves are already in operation, while the free trade zone and currency settlement are in the consultation stage. This article also found that there are some problems in monetary cooperation among China, Japan and Korea,such as low political mutual trust among China, Japan and South Korea; China, Japan and South Korea failed to get rid of dependence on the United States and the US dollar; China, Japan and South Korea failed to achieve independent operation of monetary cooperation; without "leader" in three countries, these problems hinder deep development of the China, Japan and South Korea monetary cooperation. Especially political issues between three countries, become the largest "stumbling block" of monetary cooperation among China, Japan and South Korea.On the basis of the theory of optimal currency area, this paper uses the five indicators in the theory of optimal currency area as the first-level index, constructs the traditional optimal currency area index system,and uses the secondary indexes under these indexes to analyze the possibility and operability of the current monetary cooperation among China, Japan and Korea. Through the analysis we found that some indicators have reached the standard of monetary cooperation, these indicators include product diversification, inflation coherence and financial integration; while some indicators have not yet reached the standard, but because of the "endogenous" role,these indicators will eventually tend to meet the conditions of monetary cooperation.Therefore, the possibility of monetary cooperation and operability among China,Japan and Korea is greater. In terms of potential evaluation index, this paper increases the scale of the economy, trade intensity, relative trade dependence, capital account opening degree, export diversification index and interest rate similarity and other indicators. Traditional indicators and potential indicators together constitute the current evaluation system, which is an innovation of this article.In this paper, the secondary indicators of product diversification, economic openness, inflation coherence and financial integration index in the evaluation system are cited as explanatory variables, then increase two variables of the country size and output growth rate, so as to construct the optimal currency area index model of China,Japan and South Korea, and calculate the optimal currency area index of China, Japan and South Korea. The results show that the overall value of the optimal currency area index among China,Japan and South Korea is low,and China and Japan bilateral optimal currency index is far less than China and South Korea, Japan and South Korea's bilateral optimal currency index. In addition, compared with the index of the former euro area, the gap is not large. In addition, the two crises have different impact on the cooperation among China, Japan and South Korea, the Asian financial crisis has strengthened the monetary cooperation mechanism between them, and the bilateral optimal currency index has shown a downward trend, but the emergence of the US financial crisis makes the three countries of the bilateral optimal currency index index in recent years have a small increase. On the whole, because of the low political mutual trust among China, Japan and South Korea, they need to work together to build a stable monetary cooperation system.