1. ----------------------

2. CONTENTS

3. Types of Regionalism FTAs(NAFTA), Monetary Fund NATO, WTO EU, ASEAN

4. IMF: Functions & Boundaries CURRENCY COOPERATION vs CURRENCY UNIFICATION CURRENCYCOOPERATIONCURRENCYCOOPERATIONCURRENCYCOOPERATIONCURRENCYCOOPERATION

5. IMF: Functions & Boundaries The IMF oversees the International monetary system and monitors the financial and economic policies of its members The IMF provides loans to countries that have trouble meeting their International payments and cannot otherwise find sufficient financing on affordable terms. The IMF provides practical guidance and training on how to upgrade institutions, and design appropriate macroeconomic, financial, and structural policies. MAJOR FUNCTIONS

6. IMF: Functions & Boundaries Currency Depreciation Capital control by government Restructuring financial Institutions Wiping out the inefficient relations between politics and business Open Economy System Reform moral hazard of government IMF Said Because of “Inefficient Banks & Hot money”

7. IMF: Functions & Boundaries Demanding western-style restructuring that ignores local circumstances IGNORE FOR WHOM Who benefits from relief loans Having structural problem that the IMF may take post actions but cannot prevent crisis NOT A PREEMPTIVE SYSTEM US HEGEMONY The IMF is a tool to speak for hegemony of US and a measure for the purpose of prosperity of the Western countries IMF Said Because of “Inefficient Banks & Hot money”

8. Monetary Cooperation in East Asia The IMF’s prescription worsened economic crisis. It reflected the interests of US and worsened moralhazard of western creditors. In September 1997, Japan proposed to establish AMF. To internationalize Yen currency Increased Sympathy for opinion that IMF Handling of 1997 Asian Financial Crisis failed to reflect reality

9. Monetary Cooperation in East Asia The support of liquidity was insufficient for Asian countries having small IMF quota to settle their financial crisis. Each country in asia will not be required to maintain a substantial amount of Foreign exchange reserve. If there is a prompt decision-making in region, problems were settled at an early stage US’ reason for objection: US was excluded and was concerned about loss of control over Asian region once IMF would be replaced with AMF. China’s reason for objection: Objecting to new hegemonism of Japan supported by Yen currency

10. Monetary Cooperation in East Asia In September, ASEAN + 3(KOR+JPN+CHN) agreed to strengthen regional support mechanism In May, Chianmai Agreement Failure to establish AMF In May, agreement on joint contribution of foreign exchange holding and of foreign exchange holding and formation of joint fund. Multilateral Agreement on development of currency swap Final agreement of major issues of CMI multilateralization issues of CMI multilateralization at the 12 th ASEAN + 3 Finance Ministers’ Meeting

11. Monetary Cooperation in East Asia Supply short-term fund in form of Swap Complement existing international financial support system(ex. IMF) Expiration : 3 years Swap : 2-way or 1-way Currency: Currency of requisitioning state / Dollar Maturity : 3 months, Can be extended 7 Times

12. Monetary Cooperation in East Asia KOREACHINAJAPANASEAN 32% 16% 32% 20% Key Issues of CMI Allocation of Contributions 120 Unit : Billion USD

13. Monetary Cooperation in East Asia Key Issues of CMI Multilateralization project that has been discussed since 2006 is finalized. In connection with regional monitoring body, it was agreed to establish an independent body as soon as possible and strengthen monitoring function by utilizing Asian Development Bank or ASEAN Secretariat temporarily. During the discussion of Asian Bond Market Initiative (ABMI), a specific method of the establishment of regional credit guarantee and investment mechanism was agreed.

14. Implications