Abstract
East Asian policymakers display interest in regional monetary cooperation, but a regional numeraire, or even an internal common basket, seem distant goals. This chapter reviews the literature on financial and monetary integration as it relates to East Asia, focusing on three issues. First, looking at optimum currency area principles, the literature suggests that the ASEAN+3 countries at best weakly fulfill the traditional criteria. Second, optimal sequencing principles suggest that financial market integration ought to precede the adoption of a common currency. The East Asian countries have largely followed this strategy but the liberalization of financial markets and of capital account transactions are not yet complete and it is by no mean obvious that financial deregulation and opening will pave the way for monetary integration, as it did in Europe.
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