Regional financial arrangement in East Asia
Subtitle: policy proposal for strengthening the Chiang Mai initiative multilateralization
By: Pravin Krishna, Jiyoung Choi, and Tae-Hoon Lim
Series: KIEP working paper -- 14-05
Publisher: Korea Institute for International Economic Policy
Published: 2014
Place of publication: Seoul, Korea
Language: eng
Number of pages: 58
ISBN-13: 9788932242484
Subjects: Finance
Description: Since the Asian financial crisis of 1997-98, the East Asian countries have made efforts to guard against the crisis not only by being self-insured through the accumulation of foreign reserves but also by establishing a bilateral or regional financial safety net through the pooling of reserves. Holding ample amount of foreign reserves has proven itself to be useful but it comes with a high price tag. Moreover, in spite of noticeable achievements in recent years, the regional financial arrangement, namely the CMIM framework, had not been activated during the global financial crisis in 2007-08. Ironically, the bilateral currency swaps with the US Federal Reserve Bank played a pivotal role at that time in addressing some Asian countries’ liquidity shortages. The crisis in 2007-08 has provoked a recurring discussion about the necessity of transforming the international monetary system and enhancing the alternative or complementary insurance mechanism of regional financial arrangements to fend off shocks. In the paper, we propose two ways to strengthen a regional financial arrangement in East Asia to make a practical contribution to the global architecture reform agenda and to build a resilient economy: (i) establishing a currency arrangement under CMIM framework to increase the usage of local currencies; and (ii) creating a cooperative framework between the AMRO and the IMF in the area of surveillance.
Notes: "December 30, 2014"

Includes bibliographical references (p. [53]-54).

Also available online via the Internet on the KIEP website.