scholarly journals IS EAST ASIA AS PREPARED AS EUROZONE FOR MONETARY UNION?

2012 ◽  
Vol 13 (3) ◽  
pp. 471-488 ◽  
Author(s):  
Chee-Heong Quah
Keyword(s):  
Exchange Rate ◽  
East Asia ◽  
Monetary Union ◽  
Exchange Rate Regime ◽  
Monetary Integration ◽  
Interesting Observation ◽  
The Us ◽  
Recent Developments ◽  
Optimum Currency ◽  
Reference Country

Based on optimum currency areas (OCA) theory and recent developments in the exchange rate regime literature, this paper evaluates the level of preparedness of East Asia for monetary integration by using the EMU as benchmark. Ten macroeconomic dimensions are explored in which the first five facets are measured relative to a reference country, namely the US, Japan, or China whilst the remaining five facets are measured in absolute terms, over the most recent years. In some ways, the exercise does signify the relative economic dominance of the three largest economies to the region. Results suggest that East Asia might be fairly prepared for a monetary integration especially when the reference country is the US. Another interesting observation is that amongst the eurozone founding members, Ireland has shown the lowest degree of conformity in a number of the criteria.

scholarly journals (DE)STABILIZING EXCHANGE RATE STRATEGIES IN EAST ASIAN MONETARY AND ECONOMIC INTEGRATION

2016 ◽  
Vol 61 (02) ◽  
pp. 1640021 ◽  
Author(s):  
GUNTHER SCHNABL ◽  
KRISTINA SPANTIG
Keyword(s):  
Exchange Rate ◽  
East Asia ◽  
East Asian ◽  
Monetary Integration ◽  
Integration Process ◽  
Currency Exchange ◽  
The Us ◽  
Us Dollar ◽  
Japanese Yen ◽  
Chinese Yuan

The East Asian monetary integration process is at the crossroads. Given very benign liquidity conditions in the US, the prevailing common US dollar peg has contributed to growing macroeconomic and financial instability in the region. This has sparked demands to embark on an independent monetary integration process in East Asia. The paper shows that, however, neither the Japanese yen nor the Chinese yuan can challenge the US dollar as anchor currency in the region. Large fluctuations of the Japanese yen against the US dollar have undermined the potential of the Japanese yen to become a regional anchor currency. Exchange rate stability of the Chinese yuan against the US dollar has enhanced intra-regional exchange rate stability and growth, stressing the potential of the Chinese yuan to emerge as a regional anchor currency. Yet, it is shown that underdeveloped Chinese capital markets and financial repression originating in US low interest rate policies constitute an insurmountable impediment for the Chinese yuan to gain anchor currency status in East Asia. Empirical estimations provide evidence in favor of positive growth effects of the exchange rate stability against the US dollar in East Asia.

Exchange Rate Fixation between US, China, Japan and Eurozone

2017 ◽  
Vol 11 (2) ◽  
pp. 99-120
Author(s):  
Chee-Heong Quah
Keyword(s):  
Exchange Rate ◽  
General Trend ◽  
Jel Classification ◽  
Monetary Integration ◽  
Optimum Currency Areas ◽  
The Us ◽  
Optimum Currency

This article assesses the feasibility of exchange rate fixation among the largest economies today, namely, the US, Japan, China and Germany/Eurozone, by reviewing variables according to the optimum currency areas framework. The hypothesis is that with greater interconnectedness in general through time there should be greater convergence in the monetary integration dimensions. The period examined spans from 1980 to 2012, an over-30-year period, encompassing the recent episode of global contraction. While the findings are mixed, economically they seem to suggest a general trend towards greater compatibility or at least one which is not in serious contradiction to exchange rate fixity, particularly for the US and Eurozone. JEL Classification: E62, F31, F32, F41, F42, O53

scholarly journals THE ROLE OF ASEAN EXCHANGE RATE UNIT (AERU) FOR ASEAN-5 MONETARY INTEGRATION: AN OPTIMUM CURRENCY AREA CRITERIA

2013 ◽  
Vol 15 (3) ◽  
pp. 59-88
Author(s):  
Dimas Bagus Wiranata Kusuma ◽  
Syed Mohammed Abud Ashif ◽  
Ali Musa Harahap ◽  
Muhammad Alam Omarsyah
Keyword(s):  
Exchange Rate ◽  
Monetary Union ◽  
Convergence Theory ◽  
Monetary Integration ◽  
Optimum Currency Area ◽  
Member States ◽  
Currency Area ◽  
National Currencies ◽  
Optimum Currency

The idea for regional monetary integration is grounded by the process of convergence theory within the member states. The paper analyses the possibility of monetary union in ASEAN-5 countries, Indonesia, Malaysia, Philippines, Thailand, and Singapore. In terms of volatility, by using nominal deviation indicator assessment, the ASEAN-5 currencies are suggested to peg their national currencies into Yuan since it empirically brings the lowest level of volatility, both during normal and crisis periods. Therefore, Yuan could be proposed as the anchor currency for ASEAN-5 countries. Moreover, valuing the AERU in terms of a weighed average of Yuan is important to determine which countries are considered to be an Optimum Currency Area (OCA). The results statistically suggest that all ASEAN-5 countries could be grouped as OCA according to exchange rate stability criterion.Keywords : Optimum Currency Area, AERU, ASEAN-5, Exchange Rate StabilityJEL Classification : D81, E52, F15, F36

scholarly journals THE ROLE OF ASEAN EXCHANGE RATE UNIT (AERU) FOR ASEAN-5 MONETARY INTEGRATION: AN OPTIMUM CURRENCY AREA CRITERIA

2013 ◽  
Vol 15 (3) ◽  
pp. 55-82
Author(s):  
Dimas Bagus Wiranata Kusuma ◽  
Syed Mohammed Abud Ashif ◽  
Ali Musa Harahap ◽  
Muhammad Alam Omarsyah
Keyword(s):  
Exchange Rate ◽  
Monetary Union ◽  
Stability Criterion ◽  
Convergence Theory ◽  
Monetary Integration ◽  
Optimum Currency Area ◽  
Currency Area ◽  
National Currencies ◽  
Optimum Currency

The idea for regional monetary integration is grounded by the process of convergence theory within the member states. The paper analyses the possibility of monetary union in ASEAN-5 countries, Indonesia, Malaysia, Philippines, Thailand, and Singapore. In terms of volatility, by using nominal deviation indicator assessment, the ASEAN-5 currencies are suggested to peg their national currencies into Yuan since it empirically brings the lowest level of volatility, both during normal and crisis periods. Therefore, Yuan could be proposed as the anchor currency for ASEAN-5 countries. Moreover, valuing the AERU in terms of a weighed average of Yuan is important to determine which countries are considered to be an Optimum Currency Area (OCA). The results statistically suggest that all ASEAN-5 countries could be grouped as OCA according to exchange rate stability criterion. Keywords : Optimum Currency Area, AERU, ASEAN-5, Exchange Rate StabilityJEL Classification : D81, E52, F15, F36

Monetary Integration, Fiscal Divergence and Current Account Imbalances in Europe

2018 ◽  
Vol 15 (1) ◽  
Author(s):  
Gunther Schnabl
Keyword(s):  
Fiscal Policy ◽  
Monetary Union ◽  
Current Account ◽  
European Monetary Union ◽  
Exchange Rate Regime ◽  
Early Years ◽  
Monetary Integration ◽  
Fiscal Policies ◽  
European Monetary ◽  
Panel Regressions

Abstract The paper scrutinizes the role of diverging fiscal policy stances for diverging current account positions in Europe with a focus on the European Monetary Union (EMU). In a heterogeneous monetary union fiscal policy has the task to absorb asymmetric shocks to ensure the efficacy of the one-size monetary policy. It is argued that since the early years of the European Monetary Union divergent fiscal policies combined with monetary expansion constituted a major determinant of current account divergence within the euro area, which finally led into the European debt and financial crisis. Panel regressions reveal a significant impact of fiscal policies on current account positions, which to a large extent are independent from the exchange rate regime and turn out to be contingent on monetary and fiscal policy mix. Based on the findings economic policy recommendations are presented.

scholarly journals Monetary integration issues in Latin America: A multivariate assessment

2008 ◽  
Vol 55 (3) ◽  
pp. 279-308
Author(s):  
Jean-Pierre Allegret ◽  
Alain Sand-Zantman
Keyword(s):  
Latin America ◽  
Exchange Rate ◽  
Business Cycles ◽  
Latin American ◽  
Monetary Union ◽  
Monetary Integration ◽  
Integration Process ◽  
Common Shocks ◽  
The Impact ◽  
Latin American Countries

This paper assesses the monetary consequences of the Latin-American integration process. Over the period 1991-2007, we analyze a sample of five Latin-American countries focusing on the feasibility of a monetary union between L.A. economies. To this end, we study the issue of business cycle synchronization with the occurrence of common shocks. First, we assess the international disturbances influence on the domestic business cycles. Second, we analyze the impact of the adoption of different exchange rate regimes on the countries' responses to shocks. .

scholarly journals EXCHANGE RATE FLEXIBILITY, CAPITAL MOBILITY AND INFLATION TRANSMISSION IN MALAYSIA

2009 ◽  
Vol 8 (1) ◽  
Author(s):  
Mansor H. Ibrahim
Keyword(s):  
Exchange Rate ◽  
Capital Mobility ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
International Transmission ◽  
Exchange Rate Flexibility ◽  
The Us ◽  
Small Economy ◽  
Inflation Transmission ◽  
Limited Exchange

The paper assesses the international transmission of inflation for a small economy, Malaysia, over three sample periods marked by different degrees of exchange rate flexibility. Contradicting to conventional wisdom of less pronounced foreign nominal influences under the flexible exchange rate regime, this research finds evidence that the inflation transmission from the US to Malaysia is strongest during the period marked by increasing exchange rate flexibility (i.e. 1993-1998). This research also observes significant inflation effects of exchange rate depreciation during the same period. While this research observe less pronounced impacts of the US during the limited exchange rate flexibility period (i.e. 1988-1999), the US influences are virtually absent during the recent fixed regime (i.e. 1998-2005). This research believes that the intensity of capital flows across the three periods might have explained the results.

scholarly journals Still tied by golden fetters: the global response to the US recession of 1937–1938

2012 ◽  
Vol 19 (1) ◽  
pp. 21-48 ◽  
Author(s):  
Scott Urban ◽  
Tobias Straumann
Keyword(s):  
Exchange Rate ◽  
Gold Standard ◽  
Exchange Rate Regime ◽  
Central Banking ◽  
Eastern European ◽  
Standard View ◽  
Global Response ◽  
Policy Regime ◽  
The Us ◽  
Eastern European Countries

The US recession of 1937–8 is one of the deepest on record. Yet it did not produce a global depression – quite unlike 1930. According to the standard view, this reflected an unfettering of central banking after the collapse of the international gold standard circa 1931. We challenge this view. While Germany and a couple of Central and Eastern European countries were sheltered by binding exchange controls, most countries were still constrained by their golden fetters, as our new exchange rate regime classification suggests. The underlying policy regime was surprisingly similar to that of the 1929–30 downturn. What mattered was a quick reversal in US policy in 1938 and, for many countries, a more plentiful stock of international reserves.

Russia: facing west or east

2017 ◽  
Author(s):  
Jude Woodward
Keyword(s):  
Foreign Policy ◽  
East Asia ◽  
21St Century ◽  
Us Foreign Policy ◽  
The West ◽  
Uncertain Outcome ◽  
Policy Goals ◽  
The Us ◽  
Recent Developments ◽  
Post War

This chapter reviews US-China-Russia relations in the post-war period, and considers how recent developments affect prospects for the US ‘pivot’. It explains why those driving US foreign policy towards China see the confrontation with Russia in Ukraine as a dangerous and diversionary adventure, leading to Sino-Russian convergence, distracting US attention from East Asia and undermining confidence among the US’s Asian allies of its commitment to the region. It is argued that if the US is to maintain primacy in the 21st century, it must subordinate other foreign policy goals to the paramount objective of containing China’s rise. The US’s failure to do this, instead pitting itself against both Putin in the West and China in the East, means it has driven Russia and China together, quite possibly sacrificing its vital need to contain China for a lesser goal of uncertain outcome in Ukraine.

Greece and Hong Kong

2017 ◽  
Author(s):  
Yue Chim Richard Wong
Keyword(s):  
Hong Kong ◽  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Economic Shocks ◽  
Fixed Rate ◽  
Policy Tool ◽  
Monetary Independence ◽  
Monetary Unit ◽  
The Us ◽  
Us Dollar

Both Greece and Hong Kong have unified exchange rate regimes. Greece, as a member of the Eurozone, uses the euro as its local monetary unit. Hong Kong, under the linked exchange rate regime, uses a local monetary unit with its currency fully backed by the US dollar at a fixed rate. As a consequence, both economies have surrendered monetary independence to an external monetary authority. Both have committed to not using currency devaluation or revaluation as a policy tool for stabilizing their economies when they are struck by financial and economic shocks. The only way they could regain monetary independence would be, in Greece’s case, exiting the Eurozone and reissuing the drachma, and in Hong Kong’s case, breaking the linked exchange rate and putting in place an alternative monetary arrangement for issuing the Hong Kong dollar. An economy that has joined a unified exchange rate regime will face situations from time to time when the requirements of global economic integration will be in conflict with the requirements of a political democracy.

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