The Asian Financial Crisis
The Asian Financial Crisis
This chapter discusses how the Asian financial crisis fueled East Asia’s interest in regional monetary cooperation and integration. The Asian crisis not only revealed the dangers of financial contagion and the importance of policy coordination for preventing future crises, but also provoked strong feelings of discontent with the handling of the crisis by the international community, and the IMF and the US government in particular. The crisis led to the proposed the creation of an Asian Monetary Fund (AMF) as a framework for financial cooperation and policy coordination in the region, which as thwarted by the objection of the US government and the IMF. However, the idea of an AMF, under a different name, was revived when the ASEAN finance ministers met with their counterparts of China, Japan, and Korea on May 6, 2000, in Chiang Mai, Thailand, where they agreed to establish a system of bilateral short-term financing facilities within the group. This agreement, called the Chiang Mai Initiative (CMI), provides for mutual assistance consisting of swap arrangements in the event of a financial crisis.
Keywords: East Asian countries, regional monetary cooperation, monetary integration, Asian Monetary Fund, Chiang Mai Initiative
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