East Asian Monetary Integration-A Viable Alternative to a Common Currency Area
The pace of East Asian regional integration has accelerated in recent years. One after another China, Korea, and Japan have all signed Free Trade Agreements (FTA) with the Association of Southeast Asian Nations (ASEAN). Though China and Japan have been actively promoting the process of monetary integration, the integration progress has mostly been made in the trade sector since the settlement of Chiang Mai Initiative. Ever since the East Asia Financial Crisis, potential risk of the international finance environment has been high; therefore, monetary integration is time crucial for East Asian countries. The purpose of this article is to explore the following issues: Does trade integration among East Asian countries benefit monetary integration? What is the interrelation between trade and monetary integration? How would monetary integration be achieved in East Asia; would it be like the European Union taking one step at a time, or would it take a shortcut (the third alternative discussed in this article)? Which method could better satisfy the needs of East Asian countries?