East Asian Financial Cooperation Research Articles

Impact of Global Governance on Regional Cooperation The G20 Summit and East Asian Financial Cooperation

This study analyzes the effects of the global-level governance mechanism on regional financial cooperation in East Asia since the G20 Summit was launched in 2008. First, the G20 has not had much impact on East Asian financial cooperation There has been slow but continuous progress in existing regional financial cooperation based on the IMF-linked Chiang Mai Initiative Multilateralization. Second, Chinese-led regional financial initiatives have burgeoned as a result of China s dual-track policies on global financial governance. This study contributes to understanding the global governance–regional cooperation relationship. First, the relationship varies by the legitimacy and effectiveness of global governance. Second, the leading country s role is crucial in shaping the direction of regional financial cooperation, and hence, the global governance–regional cooperation relationship. Finally, the relationship is complementary in the case of East Asia. However, with China s new regional initiatives, the global financial architecture will be more fragmented.

Nonhegemonic or Hegemonic Cooperation? Institutional Evolution of East Asian Financial Regionalism

This article undertakes to identify the key features of institutional cooperation in East Asia to promote financial regionalism. The process employed by this study involves tracking the institutional evolution of East Asian financial cooperation, and empirically comparing and contrasting two cases to achieve this article’s purpose: the emergence and development of the Chiang Mai Initiative (CMI) and China’s recent initiative for the Asian Infrastructure Investment Bank (AIIB). The results demonstrate that CMI, which is widely regarded as one of the most robust institutional arrangements in East Asia, is institutionalized in the form of “nonhegemonic cooperation” by the ASEAN plus Three countries. “Nonhegemonic cooperation” refers to intestate institutional cooperation with the absence of a single actor (or state) that has veto power and is predominant in setting its agendas. This institutional development is contrary to the theoretical expectations of the mainstream IR literature, such as neorealism and neoliberal institutionalism. In contrast, however, the aim of China’s AIIB initiative appears to be the promotion of Chinacentered regional financial cooperation that diverges from CMI-style nonhegemonic cooperation. Will East Asian cooperation be institutionally headed toward a hegemonic form? Or, will CMI-style nonhegemonic cooperation survive China’s rise? The article concludes by examining the extant theories of institutional cooperation. Particular attention is paid to the question of whether the rational institutional design approach can account for hegemonic and nonhegemonic cooperation. Future research is also suggested.

Korea and Japan in Institutionalization of East Asian Financial Cooperation: From Cooperation to Conflict?

Korea and Japan in Institutionalization of East Asian Financial Cooperation: From Cooperation to Conflict?

Regional Leadership Dynamics and East Asian Financial Cooperation: Sino-Japanese Competitive Coexistence and the Development of the Chiang Mai Initiative

Regional Leadership Dynamics and East Asian Financial Cooperation: Sino-Japanese Competitive Coexistence and the Development of the Chiang Mai Initiative

A Quantitative Assessment of Credit Guarantee Scheme in Asian Bond Markets

This paper reviews current development of the Asian Bond Markets Initiative (ABMI) and addresses the macroeconomic effects of credit guarantee schemes through the Credit Guarantee Investment Facility (CGIF) along with the ABMI. The findings from international macroeconomic simulations include that (i) even though East Asian financial cooperation upgrades some countries’ credit fundamentals, it helps increase both the corresponding countries’ real GDP and East Asia’s regional real GDP, and (ii) this effect becomes greater as credit rating upgrade happens to more ASEAN 3 member countries in East Asia. These results strongly recommend that ASEAN 3 efforts along with the ABMI should move toward building local currency bond markets on the existing achievements. For the ABMI to be more effective, moreover, the importance of regional prudential supervision and regional market infrastructure is given with greater emphasis.

Comment on “Chiang Mai Initiative Multilateralization: Origin, Development, and Outlook”

Comment on “Chiang Mai Initiative Multilateralization: Origin, Development, and Outlook”

Response and responsibility: China in East Asian financial cooperation

China's behaviour in East Asian financial cooperation has overall changed from passively responding to external pressures to taking proactive initiatives, which are highlighted by Chinese elites as evidence of a sense of responsibility. China has taken varied positions towards proposals for Asian financial regionalism, from ‘silent’ objection, to lukewarm or superficial support, to enthusiastic participation and substantial contribution, and this variance has not always taken place in a chronological order. Despite much speculation over the trajectory of China's role in East Asian regionalism, there has not been a study focused on China's policymaking towards East Asian financial cooperation. Therefore, this paper fills the gap by analysing the factors and policymaking processes that have led to those varied positions. It argues that China, recognising the momentum in the region to enhance cooperation, has replaced the blunt dismissals of proposals, particularly those from Japan, with a more subtle approach that is aimed at ensuring China's influence and promoting the image of a responsible great power; that the extent to which it can contribute to this process is mainly constrained by its economic conditions, particularly the financial institutions.

The Problems of the Global Financial System and the Significance of East Asian Financial Cooperation

The Problems of the Global Financial System and the Significance of East Asian Financial Cooperation

The Changing Political Dynamics of East Asian Financial Cooperation: The Chiang Mai Initiative

Abstract This paper analyzes the factors that have contributed to the development of the Chiang Mai Initiative, one of the prominent examples of recent East Asian financial cooperation, by comparing it with the failed 1997 proposal for an Asian Monetary Fund.

Entry into the WTO and Taiwan's Financial Internationalization

Over the years, Taiwan has made great progress in financial internationalization. At the same time, foreign exchange controls have been relaxed significantly and restrictions on capital movements have been lifted in a gradual and orderly manner. Taiwan has also been actively developing itself into an Asia-Pacific financial center since 1995. When both sides of the Taiwan Strait enter the WTO in the future, they will have to address the new conditions of opening up domestic markets and competition from international businesses. Actually, there are some issues concerning financial internationalization after Taiwan's accession in the WTO. They are appropriate capital account management, increasing cross-Strait financial activities and maintaining financial discipline and emphasize risk management. In order to maintain financial discipline, the monetary authorities should strengthen financial supervision, by conducting on-site and follow-up examination of financial institutions. On the other hand, financial institutions should abide by the rules of the game and should especially emphasize risk management. Taiwan and mainland China are expected to enter the WTO at the same time in the near future. In order to promote international stability, it is an opportunity for the two sides of the Taiwan Strait to work together toward establishing an East Asian financial cooperation mechanism.