Establishment of the Intra-Regional Monetary Union

Abstract

The necessity of East Asian regional integration lies in economics.It comes particularly from three important lessons, namely (1) the experience of the European Monetary System (EMS), (2) the Asian crisis in 1997, (3) “the lost decade or so of the Japanese economy” commencing on the beginning of the 1990s.Europe has been able to isolate the adverse effects of the dollar's large swings and volatility, by establishing the common intra-regional monetary systemwith a fixed exchange rate regime of the EC Snake from April 1972 and its successor, the EMS from March 1979.On the other hand, Japan and Asia have been tossed about by the dollar's largeswings and volatility, because Asia did not have any intra-regional monetary framework.Therefore, it is imperative for Japan and Asia to establish an intra-regional monetary system in an attempt to minimize the adverse effects of the dollar's persistent instability.