Currency and Contest in East Asia
The Great Power Politics of Financial Regionalism
Publication Year: 2008
Since the Asian Financial Crisis of 1997-98, East Asian economies have sought to make themselves less vulnerable to global financial markets by transforming the regional financial architecture. With Japan as a leading actor, they have introduced initiatives to provide emergency financing to crisis economies, support the development of local-currency bond markets, and better coordinate currency policies.
In Currency and Contest in East Asia, William W. Grimes builds on years of primary research and scores of interviews with participants and policy analysts to provide the most accurate, complete, and detailed description available of attempts to build financial cooperation among East Asian countries. Adapting realist political economy theory to the realities of contemporary global finance, Grimes places regional issues firmly in the wider context of great-power rivalries. He argues that financial regionalism can best be understood as one arena for competition among Japan, the United States, and China.
Despite their mutual desire for regional prosperity and economic stability, these three powers have conflicting political interests. Their struggles for regional leadership raise questions about the long-term feasibility of regional financial cooperation, the possible effects of Sino-Japanese rivalry on regional financial stability, and the potential for East Asian financial regionalism to undermine the long-established-albeit waning-global and regional dominance of the United States and the dollar.
Published by: Cornell University Press
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Title Page, Copyright
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Figures and Table
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This book is the culmination of over eight years of research, thought, writing, and rewriting that began in 1999. Initially, I meant only to revisit a theme that had been dropped from my fi rst book. That theme was “interna-tionalization of the yen,” a constantly mutating debate that had resurfaced in Japanese fi nancial politics every decade since the end of the Bretton ...
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IntroductionThe Emergence of East AsianFinancial Regionalism
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The rise of regional institutions and initiatives in East Asia in recent years is a striking and new phenomenon. On this much, nearly everyone can agree. But what does that mean? Is East Asia the cusp of a regional revolu-tion as governments emerge from decades, if not centuries, of political and economic fragmentation to build a cooperative order based on effective ...
1The Strategic Political Economyof Financial Regionalism
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To analyze the dynamics of fi nancial regionalism and demonstrate the importance of great power politics in shaping it, we need the right tools. In this chapter I clarify the framework for analysis as well as the specifi c political and economic contexts in which East Asian states are operating. In doing so, I demonstrate how we can apply the realist logic of great power ...
2The Rise of East Asia as a RegionProgress and Challenges
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Having laid out an analytical framework for analyzing the politics of re-gionalism, I turn now to a close consideration of East Asia as an economic and political entity. While we should expect great power politics to intrude into even functional areas of cooperation, it is the market-driven logic of eco-nomic competition, integration, and growth that provides both the basic im-...
3Lending into CrisesThe Chiang Mai Initiative
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East Asian fi nancial regionalism was forged in the crucible of the Asian Financial Crisis, as one high-growth economy after another fell victim to severe currency depreciation and credit crunches. Many observers both in-side and outside the region attributed the worst of the effects to the slow-ness, inappropriate design, and punitive nature of the IMF response. So it ...
4Currency Managementand Contestation
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The most ambitious aspect of fi nancial regionalism is currency coopera-tion. Given the almost total lack of coordination to date, it is tempting at fi rst blush simply to dismiss the whole discussion, with its aspiration of a common currency and regional central bank, as nothing more than region-alist rhetoric. But there is actually a great deal to the debate that deserves ...
5Bond Market Initiatives
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The fi nal component of East Asian fi nancial regionalism is to be found in efforts to promote bond market development. The political story in this chapter is signifi cantly complicated by the role of private sector actors. Even more than in liquidity provision and currency policies, bond market development requires governments to cater to private sector actors whose ...
ConclusionCurrency and Contest in East Asia
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Financial regionalism is happening in East Asia. Its pace can be slow and its destination is decidedly unclear, but there is no question that coopera-tive efforts are expanding and that they will be a key component of East Asian economic regionalism and regionalization more broadly. With East Asia as the home of the world’s second- and third-largest economies, not to ...
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Page Count: 264
Publication Year: 2008
Series Title: Cornell Studies in Money