Use of National Currencies for Trade Settlement in East Asia: A Proposal

Il Houng Lee and Yung Chul Park
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Il Houng Lee: Korea Institute for International Economic Policy
Yung Chul Park: Korea University

No 14-1, Staff Papers from Korea Institute for International Economic Policy

Abstract: Despite a few landmark achievements such as the Chiang Mai Initiative, financial deepening and monetary integration in East Asia has been slow. Meanwhile, proliferation of FTAs and China's successful accession to the WTO have enabled faster progress on trade integration among the East Asian economies. Building on the expanding intra- regional trade, we suggest creation of a multilateral currency arrangement where some of the national currencies could be used for trade settlement within the cooperative framework of ASEAN 3. This would facilitate closer financial integration and greater flexibility of the Asian currencies against the US dollar without being kept captive by the slow progress in capital account liberalization in some countries.

Keywords: Regional Financial Arrangement; Regional Financial Integration; Currency Internationalization; International Monetary System (search for similar items in EconPapers)
JEL-codes: F15 F33 F36 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-04-17
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Citations: View citations in EconPapers (2)

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