East Asian financial cooperation

Author: [US] Heng Ning
Publisher:
Publish Date: 2005-01-01
Features: After the Asian financial crisis of 1997, the countries in the region have been striving to explore how to prevent regional financial crises through enhanced regional monetary financial cooperation. Some East Asian countries and scholars have continuously proposed various suggestions, ranging from establishing the Asian Monetary Fund (AMF) to creating an Asian common currency. However, most of these proposals are either unrealistic or too far ahead, making them difficult to be accepted by most East Asian countries. The United States and the International Monetary Fund (IMF) have gone even further in opposing the establishment of the AMF. In May 2000, China, Japan, South Korea, and ASEAN (referred to as "10+3") reached the "Chiang Mai Initiative" in Chiang Mai, Thailand, marking a significant step forward in discussing how to effectively collectively prevent financial crises and promote regional financial stability and cooperation, laying a foundation for further development of monetary financial cooperation in East Asia. Subsequently, the "10+3" member countries have signed 16 bilateral currency swap agreements based on the principles established by the Chiang Mai Initiative, with a total scale of $27.5 billion (as of the end of December 2003). Although such financial resources are negligible compared to the region's massive foreign exchange reserves, their significance in advancing the common political and economic strategic interests of East Asian countries, as well as the spirit of "mutual trust, mutual assistance, and mutual progress," far exceeds the bilateral currency swap agreements themselves. In September 2002, Professor Heng Ning published his seminal work, "Financial Cooperation in East Asia," which provides a valuable exploration of the East Asian financing arrangements that pioneered financial cooperation in the region and related issues. In the book, he analyzes the reasons, impacts, and prospects of East Asian financial cooperation, comprehensively examines the arguments for and against East Asian financing arrangements, elaborates on the main contents of the Chiang Mai Initiative, conducts a detailed comparison between the Chiang Mai Initiative and other regional financing arrangements, and offers some suggestions on how the Chiang Mai Initiative can maintain complementarity with multilateral institutions and how it can be strengthened in the future. He particularly dissects the concerns and interests of the United States and the IMF regarding East Asian financial cooperation, evaluating the impacts of East Asian financing arrangements on the global financial system. As East Asian financial cooperation is on the rise, Professor Heng Ning's systematic research on the financing aspects of East Asian financial cooperation undoubtedly enriches our understanding of the profound historical and strategic significance of the current and future East Asian financial cooperation. Some of the views and suggestions proposed by Professor Heng Ning hold significant reference value.