East Asia Financial and Monetary Cooperation: A Process Toward Monetary Integration

This research paper explores the dynamic of financial and monetary integration in East Asia. For more than 20 years, East Asia has built a strong economic linkage, in particulars such as intraregional trade, investment flows and regional division of labour. The close interconnectedness among East Asian countries has created integrated region of economic activities. As a result, the East Asian financial crisis traumatized these economies and strengthened their desire to establish further monetary and financial cooperation among them. Various initiatives had been implemented in the region, including the creation of the AMF, the establishment of the ASEAN+3 framework and the initiation of Chiang Mai Initiatives. These initiatives have underlined their desire to integrate economically, particularly in the financial and monetary domains. This paper describes the process of monetary and financial integration in East Asia from 2 perspectives, the first being an economic and monetary process perspective and the second referring to the regional institution and policies convergence perspective. These perspectives will define the materialization of de facto financial and monetary integration taking place in East Asia. This paper will also identify the future desired outcome of monetary and financial integration. The call for a single regional currency has been significantly discussed among various scholars. Therefore the need to formulate an agreed framework of monetary and financial integration is highly recommended.