Directions of East Asian Regional Financial Cooperation

Abstract

The East Asian financial crisis was the impetus for many financial cooperation initiatives within the region. This paper reviews progress in a number of areas, particularly the Chiang Mai Initiative, which aims to enhance a country's access to foreign reserves in times of stress via a series of swap arrangements in the region, and the development of the Asian Bond Market in order to increase long-term financing for deficit countries so they will not have to rely mainly on short-term foreign borrowing, as was the case prior to the crisis. A number of recommendations are made, including the setting up of a regional organization to coordinate a multilateral version of the Chiang Mai Initiative and further development of the regional currency and bond markets to increase the private sector's access to long-term financing. Given the region's huge holding of foreign reserves, the paper also recommends a much more proactive approach in managing these reserves in order to influence global financial developments. (c) 2007 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Contagious Effects of Oil Prices on Asian Stock Markets’ Behaviour

“…East Asia is actually a region with a massive net surplus of savings but they were being channelled to financial institutions in the West before they were partially recycled back into the region again (Sussangkarn & Vichyanond, 2006). This would bring drawbacks to East Asia as Western financial institutions certainly charge heavy fees to Eastern borrowers.…”

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“…The CMI is bilaterally activated with no overall coordinating body. At this stage it is more symbolic than effective but it has the potential to provide a mechanism for policy dialogue and coordination (Sussangkarn, 2010). After much delay and negotiation, the political barriers to multilateralization of the CMI (CMIM) have now been overcome.…”

“…A well functioning CMIM would make a positive contribution towards global financial architecture (Henning, 2009). This will need effective and independent surveillance and globally transparent arrangements (Henning, 2009) and more needs to be done on commitments to pool reserves (Sussangkarn, 2010).…”

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“…A well‐functioning CMIM would make a positive contribution toward global financial architecture (Henning, 2009). This will need effective and independent surveillance and globally transparent arrangements (Henning, 2009), and more needs to be done on commitments to pool reserves (Sussangkarn, 2010).…”