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)
