Monetary Policy Cooperation to Support Asian Economic Integration

The Singapore Economic Review (SER), 2010

Posted: 7 Jun 2010

See all articles by Hwee Kwan Chow

Hwee Kwan Chow

Singapore Management University

Peter N. Kriz

Singapore Management University

Roberto S. Mariano

Singapore Management University

Augustine H.H. Tan

Singapore Management University - School of Social Sciences

Date Written: March 1, 2010

Abstract

This paper considers the form of monetary policy coordination and regional exchange rate arrangement that would best support economic and financial integration in East Asia. In view of the region's economic diversity, we propose a graduated program of informal policy cooperation from weak forms of cooperation to more intensive modes of cooperation such as the adoption of common monetary policy objectives. An array of informal monetary arrangements rooted to the degree of institutional development can improve the effectiveness of both sovereign and regional institutions, and promote integration in East Asia. Drawing upon the European experience with the Exchange Rate Mechanism (ERM), we conclude that East Asia should first embark on other forms of integration to aid in the development of a high degree of real and nominal convergence amongst the regional countries. Only then would an ERM-type system that employs a regional monetary unit become more sustainable and less susceptible to speculative currency attacks in the region.

Keywords: Regional Economic Integration, Monetary Policy Cooperation, Exchange Rate Arrangements, Sequencing

Suggested Citation

Chow, Hwee Kwan and Kriz, Peter N. and Mariano, Roberto S. and Tan, Augustine H.H., Monetary Policy Cooperation to Support Asian Economic Integration (March 1, 2010). The Singapore Economic Review (SER), 2010. Available at SSRN: https://ssrn.com/abstract=1620208

Hwee Kwan Chow (Contact Author)

Singapore Management University ( email )

Li Ka Shing Library
70 Stamford Road
Singapore 178901, 178899
Singapore

Peter N. Kriz

Singapore Management University ( email )

Li Ka Shing Library
70 Stamford Road
Singapore 178901, 178899
Singapore

Roberto S. Mariano

Singapore Management University ( email )

50 Stamford Rd.
Singapore 912409, 178899
Singapore

Augustine H.H. Tan

Singapore Management University - School of Social Sciences ( email )

Tanglin P.O. Box 257
Singapore 912409
Singapore
+65 6822 0379 (Phone)
+65 6822 0101 (Fax)

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