Monetary and Financial Cooperation in East Asia: The State of Affairs After the Global and European Crises

255 Pages·2015·1.328 MB·English

by  Masahiro Kawai, Yung Chul Park, Charles Wyplosz

Monetary and Financial Cooperation in East Asia

Monetary and Financial
Cooperation in East Asia
The State of Affairs after the Global
and European Crises
Edited by
Masahiro Kawai, Yung Chul Park, and Charles Wyplosz
1
3
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Contents
ListofFigures vii
ListofTables ix
Abbreviations xi
ListofContributors xv
1. Introduction 1
CharlesWyplosz
2. FinancialandMonetaryCooperationinEastAsia 11
MasahiroKawaiandYungChulPark
3. InternationalFinancialIntegrationandCrisisIntensity 52
AndrewK.Rose
4. LessonsfromtheEuropeanPublicDebtCrisis 79
CharlesWyplosz
5. AViewfromASEAN 102
ChalongphobSussangkarnandWorapotManupipatpong
6. AViewfromthePeople’sRepublicofChina 133
YongdingYu
7. AViewfromJapan 158
MasahiroKawai
8. AViewfromtheRepublicofKorea 198
YungChulParkandChi-YoungSong
Index 223

List of Figures
2.1 GrosscapitalinflowsinEastAsiaexcludingJapan 13
2.2 ExportgrowthinEastAsia 14
2.3 GDPgrowthinEastAsia 15
2.4 RealeffectiveexchangeratesoftheEastAsianeconomies 17
2.5 CurrentaccountsurplusesofEastAsianeconomies 21
2.6 EastAsia’stradeandGDPgrowth,2000–12 24
2.7 EastAsia’sforeigndirectinvestmentflows,2000–12 28
2.8 ScopeofconcludedFTAsinEastAsiatotal,2000–12 31
2.9 StructureoftheChiangMaiInitiative 36
2.10 DevelopmentanddeepeningofAsiancorporatebondmarkets,2011 42
2.11 Shareofintraregionalportfolioinvestmentindebt 43
3.1 Theprogressiverecession 59
3.2 Insulationfromthecurrentaccount 60
3.3 AssetexposuretotheUnitedStates 64
3.4 AssetexposuretoJapan 65
3.5 AssetexposuretotheRepublicofKorea 65
3.6 AssetexposuretothePeople’sRepublicofChina 66
3.7 BankexposuretotheUnitedStates 67
3.8 BankexposuretoJapan 67
4.1 Exchangeratevolatilitybeforeandduringthecrisis 84
4.2 Changeinexchangeratevolatilityandtheexchangerateregime 84
4.3 TheAMUexchangerate,2000–14 89
4.4 Regionalrealexchangeratedispersion 90
4.5 Changeintradebetween2007and2009 91
5.1 Exchangeratetrends 114
5.2 Eurotradeeffects 124
6.1 ThefluctuationsofASEAN+2currenciesagainsttheUSdollar,
yen,andeuro 140
ListofFigures
6.2 FluctuationofEastAsiancurrenciesagainsttheUSdollar 140
6.3 FluctuationofEastAsiancurrenciesagainsttheeuro 141
7.1 Nominalyenappreciationmatchedbyrelativepricedeflation 162
7.2 Japan’scurrentaccountanditscomposition 166
7.3 Realeffectiveexchangeratesoftheyen,BISdata,andforautomobiles 169
7.4 Productionofnon-tradablegoodsrelativetotradablegoods,
nominalandreal 170
7.5 Japan’sMOFinterventionintheforeignexchangemarket 171
7.6 Nominalexchangeratesoftheyenagainstthewonandothercurrencies 174
7.7 CorrelationofGDPgrowthratesbetweenJapanandmajoreconomies 180
8.1 TrendofforeignexchangereservesintheRepublicofKorea 200
8.2 Sovereignspreads:foreigncurrencydenominatedsovereignbond
spreads(vs.USTreasurynote) 202
8.3 CDSpremiumontheRepublicofKoreagovernmentbond 202
8.4 StockpricemovementsinEastAsia 203
8.5 ExchangeratesagainsttheUSdollarofEastAsianeconomies 204
8.6 ChangesinstockpriceandexchangeratesintheRepublicofKorea 204
8.7 Fluctuationsofthewon/dollarexchangeratesincethebreakout
oftheglobalfinancialcrisis 207
8.8 FrequencyoftheRepublicofKorea’sinterventionsinthewon/dollar
foreignexchangemarket 209
8.9 Won/dollarexchangerateflexibilityindex 210
8.10 NominalandrealeffectiveexchangeratesoftheRepublicofKoreawon 210
viii
List of Tables
2.1 FiscalpolicyinmajorEastAsiancountries,2009and2010 19
2.2 DestinationofEastAsia’sexportsbystagesofproduction,1995–2012 25
2.3 SourcesanddestinationsofEastAsia’sforeigndirectinvestment
flows,2003–12 29
2.4 FinancialcontributionsandvotingpowersundertheChiang
MaiInitiativeMultilateralization 38
2.5 IMFclassificationofEastAsianexchangerateregimes,2012 45
3.1 Crisismanifestations 55
3.2 MIMICmodelestimateswithonlycontrolvariables 58
3.3 Addingmultilateralfinanciallinkages,2006 61
3.4 Addingbilateralfinanciallinkages,2006 63
3A Datasample 77
4.1 Changeintradebetween2007and2009 90
4.2 Correlationsofchangesbetween2007and2009ofexportswith
variousmeasuresofexchangeratemovements 92
4.3 Currencyswaparrangementsduringthecrisis 93
5.1 RatioofexportsofgoodsandservicestoGDP 111
5.2 Bankcapitaltoassetsratio 112
5.3 Foreignreservesandpotentialshort-termliabilities 113
5.4 TotalASEANtrade,2008–9 114
5.5 ASEANrealGDPgrowth,2006–11 115
5.6 Intra-EastAsiantradeshares 116
6.1 WeightsofcurrencychangesinEastAsiancurrenciesexplained
bytheUSdollar,euro,andyen 141
6.2 TradegrowthofEastAsianeconomies,1996–2012 143
7.1 Internationallycoordinatedinterventionfortheyen 172
7.2 Currencydistributionofreportedforeignexchangemarketturnover 175
7.3 Estimatedsharesofcurrencyareasofmajorcurrencies,1970–2007 177
7.4 Rankingofglobalfinancialcenters,March2007–September2013 183