Currency Cooperation in East Asia (Financial and Monetary Policy Studies Book 38)

This book explores the opportunities and limits of currency cooperation in East Asia. Currency issues play an important role in the region. The Asian crisis of the late 90s was rooted in deficient currency arrangements. The Chinese RMB is not freely convertible yet, but policymakers in China nevertheless aim for a more international role of the Chinese currency. The recent change of direction in Japanese monetary policy caused a drastic depreciation of the Yen and led to warnings against a possible “currency war”, thus demonstrating that currency issues can also easily lead to political frictions. Most trade in and with the East Asian zone on the other hand is still conducted in US $. Against this background different modes of currency cooperation serve the goal of smoothing exchange rate fluctuations and capital flows. They are an important element to promote financial stability and to reduce the transaction cost for foreign trade or investment. The contributions of this book analyze the environment and design of currency cooperation in East Asia and their effects from a macro-and microeconomic viewpoint. Front Matter....Pages i-viii Currency Area East Asia: Cooperation or Confrontation?....Pages 1-19 China’s Financial System: Past Reforms, Future Ambitions and Current State....Pages 21-41 Japan’s New Monetary Policy: Some Critical Questions....Pages 43-55 RMB Internationalisation and Currency Cooperation in East Asia....Pages 57-81 Regional Exchange Rate Management in East Asia: Possibilities and Limits....Pages 83-95 The Chiang Mai Process as a Case Study of Financial Cooperation in Pacific Asia: Institutional Issues and Experiences....Pages 97-110 Reserve Policies of East Asian Central Banks: Causes, Consequences and Prospects....Pages 111-122 Korea-China Currency Swap-Financed Trade Settlement Facility....Pages 123-132 Asian Currency Cooperation and the Potential Microeconomic Effects of Reduced Exchange Rate Fluctuations....Pages 133-142 The Role of Reserve Requirements: The Case of Contemporary China Compared to Postwar Germany....Pages 143-161 Back Matter....Pages 163-166