Publication Type

Journal Article

Version

acceptedVersion

Publication Date

3-2010

Abstract

This paper considers the form of monetary policy coordination and regional exchange rate arrangement that would best support economic and financial integration in East Asia. In view of the region's economic diversity, we propose a graduated program of informal policy cooperation from weak forms of cooperation to more intensive modes of cooperation such as the adoption of common monetary policy objectives. An array of informal monetary arrangements rooted to the degree of institutional development can improve the effectiveness of both sovereign and regional institutions, and promote integration in East Asia. Drawing upon the European experience with the Exchange Rate Mechanism (ERM), we conclude that East Asia should first embark on other forms of integration to aid in the development of a high degree of real and nominal convergence amongst the regional countries. Only then would an ERM-type system that employs a regional monetary unit become more sustainable and less susceptible to speculative currency attacks in the region.

Keywords

Regional Economic Integration, Monetary Policy Cooperation, Exchange Rate Arrangements, Sequencing

Discipline

Asian Studies | Economic Policy | Finance

Research Areas

International Economics

Publication

Singapore Economic Review

Volume

55

Issue

1

First Page

83

Last Page

101

ISSN

0217-5908

Identifier

10.1142/S0217590810003626

Publisher

World Scientific

Additional URL

https://doi.org/10.1142/S0217590810003626

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