China and Monetary Integration in East Asia

The Asian currency crisis of 1997 eroded the credibility of unilateral fixed exchange rates and renewed calls for greater monetary integration and regional exchange rate stability. China is dominating the regional economy. Creation of a single Asian currency will take time. The first step should be expansion of the Chiang Mai Swap Agreement to deal with emergency situations. The next steps might be a common basket peg followed by establishment of an Asian monetary unit currency basket.