East Asian Monetary Integration: Destined to Fail?

Rhee, Yeongseop

doi:10.1093/ssjj/7.1.83

Cited by 8 publications

(5 citation statements)

References 17 publications

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“…Other authors (e.g. Grimes, 2009Grimes, , 2011Narine, 2003;Rhee, 2004) have been more skeptical about the prospects of an effective, autonomous regional rescue fund, due to political contention between Japan and China over regional leadership.…”

Section: Cmi: Development and Debatesmentioning

confidence: 99%

East Asian financial regionalism: why economic enhancements undermine political sustainability

Grimes

2015

Contemporary Politics

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East Asian financial regionalism was born in response to the Asian Financial Crisis of 1997-1998. The centrepiece of financial regionalism was the Chiang Mai Initiative (CMI), an emergency liquidity mechanism created by the ASEAN+3. It embodied both a clear interpretation of what had gone wrong in 1997-1998 and an understanding of the need for institutions that would be politically viable despite Sino-Japanese rivalry. Enforcement under CMI relied on the 'IMF link' -release of funds would be predicated on crisis countries' initiating negotiations with the International Monetary Fund (IMF), as a means of reducing moral hazard, enforcing conditionality and diverting blame from the leading creditors, Japan and China. The global financial crisis of 2008-2010 and the eurozone crisis that followed have inspired important changes meant to address CMI's economic gaps, including accelerated adoption of 'CMI Multilateralization' (CMIM), the creation of a new surveillance unit (ASEAN+3 Macroeconomic Research Organization, or AMRO), and the establishment of a new precautionary line. Many observers have remarked that these developments weaken the IMF link, which had effectively subordinated CMI to the IMF. While the moves appear to demonstrate a more confident, autonomous regionalism and a relative devaluation of the US-dominated global financial institutions, this paper argues that in fact, the ASEAN+3 states have again unearthed the underlying politics of divided leadership and mutual suspicion. CMIM is now threatened by the renewed potential for internal divisions. Further complicating the picture, both China and Japan have recently established large bilateral swap lines outside of the CMIM framework with several of their ASEAN+3 partners, raising the question of whether CMIM is moving towards political irrelevance even as it has arrived at a high water mark in its institutional development.

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Section: Cmi: Development and Debatesmentioning

confidence: 99%

East Asian financial regionalism: why economic enhancements undermine political sustainability

Grimes

2015

Contemporary Politics

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“…These authors saw the problems of moral hazard and credibility as important but surmountable. Other authors (e.g., Narine 2003;Rhee 2004;Grimes 2006Grimes , 2009aGrimes , 2011 focused more directly on the political difficulties of achieving regional financial cooperation when the leading states were engaged in a contest for regional power. In my own work, I have argued that the IMF link is the only practical way in which moral hazard can be avoided as long as Japan and China are unable or unwilling to exert a cooperative hegemonic leadership.…”

Section: Chiangmentioning

confidence: 99%

“…Other authors (e.g. Rhee 2004;Grimes 2006Grimes , 2009aGrimes , 2011 are suspicious that a surveillance regime of this sort can or will be effective. Their objections are based on three assumptions: that surveillance cannot be made apolitical or 'objective' in the context of the ASEAN+3, that potential lenders will not be politically absolved of a decision to impose strict conditions or refuse to provide funds simply because they based their decision on an 'autonomous' surveillance process, and that credibility cannot be maintained on all sides at a lower cost than through the IMF link.…”

Section: Surveillance and The Imf Linkmentioning

confidence: 99%

The future of regional liquidity arrangements in East Asia: lessons from the global financial crisis

Grimes

2011

The Pacific Review

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“…This also holds for Japan, which has somewhat conflicting goals, has an exorbitant budget deficit, and is concerned whether money committed to the region is safe from being misused in the various schemes. One may indeed criticize this as Japanese government 'ambiguity' (see, for instance, Rhee 2004). …”

Section: Monetary and Financial Cooperation In East Asia Since 1997-98mentioning

confidence: 99%

The role of regional financial arrangements and monetary integration in East Asia and Europe in relations with the United States

Pascha

2007

The Pacific Review

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Regional financial arrangements and monetary integration in East Asia and Europe have made considerable progress in recent years. This paper discusses whether governments in both regions, Japan and Germany as the most advanced regional economies in particular, can use the new dynamics as levers to raise their status vis-à-vis the United States. It will be argued that activities are defensive rather than offensive, aiming at protecting the respective region from financial risk. Japan, in particular, would find it difficult to raise its status vis-à-vis the United States significantly by promoting regional financial and monetary integration, principal reasons being actor heterogeneity, the role of China, hesitation to bear burden and risk, and the historical legacy of a bank-oriented system.

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East Asian Monetary Integration: Destined to Fail?

Cited by 8 publications

References 17 publications

East Asian financial regionalism: why economic enhancements undermine political sustainability

East Asian financial regionalism: why economic enhancements undermine political sustainability

The future of regional liquidity arrangements in East Asia: lessons from the global financial crisis

The role of regional financial arrangements and monetary integration in East Asia and Europe in relations with the United States

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