Reinventing the Chiang Mai Initiative

William W. Grimes, associate professor of international relations at Boston University, founding director of the Boston University Center for the Study of Asia, and APP member will be in Tokyo this week to discuss his book Currency and Contest in East Asia: The Great Power Politics of Financial Regionalism (Cornell UP) and receive the Masayoshi Ohira Memorial Prize.

REGIONAL LIQUIDITY ARRANGEMENTS IN ASIA: 

LESSONS FROM THE FINANCIAL CRISIS

Friday, June 11, 7:30-9:30pm

Institute of Contemporary Asian Studies (ICAS)
Temple University, Japan Campus, Azabu Hall 206

Since the Asian Financial Crisis of 1997-98, the East Asian economies have sought to make their economies less vulnerable to global financial markets by transforming the regional financial architecture. With Japan as a leading actor, they have introduced initiatives to provide emergency financing to crisis economies, support the development of local-currency bond markets, and better coordinate currency policies.

In Currency and Contest, William W. Grimes places regional issues firmly in the wider context of great-power rivalries. He argues that financial regionalism can best be understood as one arena for competition among Japan, the United States, and China. Despite their mutual interests in regional prosperity and economic stability, these three powers have conflicting political interests. 

Their struggles for regional leadership raise questions about the long-term feasibility of regional financial cooperation, the possible effects of Sino-Japanese rivalry on regional financial stability, and the potential for East Asian financial regionalism to undermine the long-established-albeit waning-global and regional dominance of the United States and the dollar.

In the year and a half since Currency and Contest was published, events have confirmed the importance of this analysis for understanding currency and financial issues in East Asia and globally. In the face of the global financial crisis, ASEAN+3 countries have accelerated the multilateralization of the Chiang Mai Initiative, raising hopes and fears that it will culminate in a reprise of Japan’s 1997 proposal to create an Asian Monetary Fund. 

Meanwhile, Chinese officials have argued publicly for the need to remove the dollar from its central place in the global financial order and signaled a desire to promote greater international use of the RMB. And the economic resilience of China and other Asian economies has seemingly prompted a new assertiveness in challenging global financial standards and governance. 

In his Tokyo talk, Grimes will examine the potential for the redesigned Chiang Mai Initiative to address the challenge of a future crisis.