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Despite the frosty political relations between Japan and its East Asian neighbors, the three economic powerhouses of the region have managed to keep intergovernmental financial co-operation on track. During the Asian Development Bank's annual conference in Hyderabad, India, which ended last Saturday, finance ministers of China, Japan and the Republic of Korea agreed to push for more monetary co-operation among the three countries. They also encouraged such efforts in the framework of ASEAN Plus Three, the process aiming for greater economic integration and co-operation in the region. However, no breakthrough was made. Many steps they promised to take will be of tentative nature. But the mere fact that the ministers of the trio agreed to take concerted efforts on a wide array of financial issues was a reassuring sign that they take their common economic interests seriously. All three do not want the ever-closer ties among regional economies to be hurt, and all three are willing to facilitate further economic integration. Moreover, the three ministers reached a consensus on the reform of the International Monetary Fund (IMF). They also voiced their support for the progress of such regional financial programs as the Asian Bond Market. The more eye-catching points in their agreement were about the expansion of the Chiang Mai Initiative (CMI) and about the study of the usefulness of a regional currency unit. The two issues were intriguing because they promised prospects that could change the international economic landscape. The former a mechanism launched in 1999 among East Asian nations for bilateral deals to boost government foreign exchange reserves sought to turn the CMI into a multilateral mechanism that could end up with something like an Asian version of the IMF; and the latter could eventually lead to a unified Asian currency like the euro. It remains an open question whether a unified currency is needed and what the roadmap should be like should policy-makers one day reach the conclusion that it is both necessary and feasible. But what is really important is that financial policy-makers are willing to work together for increasing financial integration and keep their minds open to all novel ideas, be it a mini IMF or an Asian dollar or something more suitable for Asia. As the biggest economic players in the region, what the East Asian trio think and do in this regard will be crucial. Asian economic integration will certainly be a long process because of the highly diverse levels of economic development. However, without pragmatism and goodwill, those prospects will be even more remote. (China Daily May 8, 2006)
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