Financial Regionalism after the Global Financial Crisis: Regionalist Impulses and National Strategies

Abstract

The Global Financial Crisis has severely weakened the legitimacy of the US-led global financial system. This has not only led to efforts to remake the global system through the G20 and related process but has also aroused interest in regional alternatives to the global architecture. Considerable attention has understandably been focused on Europe, but the global crisis also has profound implications for East Asia. Clichés about the ‘rise of East Asia’ obscure the very real contest now being fought over the shape of regional financial cooperation in East Asia, particularly through the ASEAN + 3. This chapter investigates the impact of two variables that theories predict will be of particular importance going forward: (a) the increasing desire of East Asian neighbors to contain Chinese influence in the region and (b) the increased number of ASEAN + 3 participants that have also become official participants in the global-level discussions due to the formation of the G20. The chapter concludes that these changes are likely to increase the tensions inside ASEAN + 3, even as the demand for regionalist solutions increases.

Leaving the Nest: The Rise of Regional Financial Arrangements and the Future of Global Governance

“…In practice, it has reaffirmed the importance of the biggest members, Japan and China. As has been argued elsewhere (see Grimes, 2009Grimes, , 2012Grimes, , 2015, these two countries are the ones putting their money most at risk, whereas others (especially ASEAN-4 and South Korea) are the most forward-leaning in terms of expanding resources, easing conditions and reducing the IMF link.…”

“…Currently, members can draw upon (at most) 30 per cent of their borrowing maximums without IMF coordination, making effective use of CMIM contingent on IMF approval. As Grimes (, ) has argued, this reflects a conscious choice by the leading members, China and Japan, to delegate the unpleasant task of conditionality to an outside party, so as to minimize both moral hazard and direct political blowback. Other functions, such as surveillance and contingency planning, operate in parallel or in cooperation with the IMF.…”

Influence of Regional Financial Market Models on the Structure of Global Financial Assets

“…The U.S. leadership became subject of exacerbating discontent, as global standards proved incapable to prevent the crisis and emerging economies accumulated greater amounts of foreign currency reserves. The scope of bailouts in time of global financial crisis was another factor in favor of cofinancing in many of them, which increased the position (and, therefore, influence) of regional groupings [14] and regional finances.…”

“…In theoretical studies on financial markets development, the models of the national financial markets are considered and the European (continental, banking), Anglo-American and mixed models are distinguished [16], [17]. The results of empirical studies of the directions and scales of financial assets movement between countries and regions of the world are presented in the works of foreign scholars [6], [12], [14], [18] and analytical publications of the international financial organizations and research institutionsthe International Monetary Fund, The World Bank, the Bank for International Settlements, the World Economic Forum, the McKinsey Global Institute, and others. Alongside it, issues of functioning and structural organization of financial markets of the global regions, which are still insufficiently considered, require special attention in terms of deepening regionalization in the financial sphere and the growth of scientific interest in the study of the regional component of global integration processes.…”

Regional and Multilateral Surveillance: Normative Tensions and Implications for Cooperation in East Asia

“…Although there are expectations that the weakened legitimacy of the existing global surveillance framework has widened room for regional authorities to come up with their own approach to surveillance, East Asian countries have yet to demonstrate leadership in this area. Evidence to date is still preliminary but Grimes notes that the potential for substantive regional action is still unclear as ‘the problem of providing collective goods in the absence of clear leadership or a high level of confluence of individual states’ interests will be difficult to surmount, even where overall regional demand for such collective goods remains high’ (Grimes, , p. 103). However, recent developments in AMRO (which are discussed in greater detail in the next section) imply that the region is progressing towards a consensus on surveillance indicators.…”