Abstract
The plan initiated by Japan for forming an Asian Monetary Fund in a mode of ASEAN+3 countries after Asian financial crisis in 1997 was not realised due to opposition from USA, IMF and China and the plan was revamped through CMI multilateral currency swap and pacific nation’s joining with US Dollar hegemony but at present it is confronting Chinese supremacy over the region. Thus, in this paper the author thought of forming a new Asian bloc consisting of SAARC, ASEAN, GCC, China, Japan and Korea for which a new framework of Asian Monetary Fund can be set up with a view to not only supplying additional liquidity in crisis period as well as for developmental finance but also can function for issuing a common currency of the new Asian bloc that is a currency basket which will be formed by currencies of China, Japan and Korea and the currencies of blocs viz SAARC, ASEAN and GCC where unit of account of currency will be measured by gold or silver and the exchange of currency unit of Asia is primarily fixed with Chinese Yuan. The exchange rates of all currencies in the basket will be calculated daily through floating exchange rate mechanism in Asian bloc and common currency will also be floated in SDR basket if CUA is included in SDR basket. The exchange rates will be maintained by Asian Monetary Fund through target zone of ±2.5% fluctuation. The plan also requires monetary and trade integration as well as political integration with the implementation of Asian stock exchange institute, Asian Parliament, Asian Security council, Asian Central Bank and Asian Clearing Union respectively. The common barriers like Sino-Japan rivalry, US dollar hegemony, non-cooperation from IMF, premature OCA criteria and low capital market internationalisation may delay the process of Asian Economic Integration towards formation of a new Asian Monetary Fund.
Highlights
Haruhiko Kuroda, the Director of the International Bureau of Ministry of Finance had developed the idea of Asian Monetary Fund and Sakakibara and Kuroda gave leadership support to promote AMF so that the financial authorities of Japan proposed the creation of an Asian Monetary Fund during the G7 meeting in Hongkong in September 20-25,1997 just after the Asian financial crisis
AMF consists of several challenges, like [i] over past 20 years Asia had not faced severe financial crisis,[ii]with a low degree of monetary integration in ASEAN+3,the setting up of AMF is over ambitious,[iii]Bergstein(1998) suggested that if USA joins problem of AMF establishment would be solved,[iv]mutual trust and political cooperation are essential,[v]ASEAN+3 has scope to reform in CMIM where the great changes had occurred in China and Japan on their GDP share in the World as well as in Asia
The paper has given a clear picture about a new Asian Monetary Fund in a new Asian bloc which is yet to be materialised the feasibility constraints are minimum to realise it because all the existing blocs that were mentioned in the paper have been spent many years of economic integration process
Summary
Haruhiko Kuroda, the Director of the International Bureau of Ministry of Finance had developed the idea of Asian Monetary Fund and Sakakibara and Kuroda gave leadership support to promote AMF so that the financial authorities of Japan proposed the creation of an Asian Monetary Fund during the G7 meeting in Hongkong in September 20-25,1997 just after the Asian financial crisis. Towards the road of successful CMI process, Asami (2001) argued that both IMF and EU gave green signal to bilateral and multilateral currency swap in Chiang Mai Initiative and have no opposition to continue to develop ASEAN+3 economic and monetary integration and agreed the process of common currency for ASEAN and SAARC. All these steps claim for establishing a separate institution for Asia like Asian Monetary Fund for solving liquidity problem and currency management.
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