East Asia could learn two valuable lessons from the eurozone crisis. First, do not rush the process of financial and monetary integration; and, second, develop adequate institutional frameworks before proceeding.
In fact, East Asian countries are unlikely to move toward a regional fixed exchange-rate system or a monetary union with a single currency in the immediate future, owing to the region's great diversity in terms of economic and political conditions. Perhaps, in a few decades, the region's countries will develop institutions to promote financial integration, such as a single bank supervisory agency of the type that the European Union is now creating.
Nevertheless, Asian policymakers should improve cooperative mechanisms designed to prevent and manage crises. Most promising is the Chiang Mai Initiative Multilateralisation (CMIM) of the Asean+3 _ the 10 members of Asean plus China, Japan, and South Korea. This US$120 billion (3.68 billion baht) regional reserve pool was launched in 2010 to provide short-term liquidity to members in an emergency.
This article is older than 60 days, which we reserve for our premium members only.You can subscribe to our premium member subscription, here.