Study On East Asia Monetary Cooperation And The Role Of China

With the deeply development of economic globalization, the tendency of economic regionalization, which was represented by the Latin American's "dollarization", the West African Economic and Monetary Union and especially the earthshaking birth of Euro, has become more and more obviously. The highest level of economic regionalization is regional monetary cooperation. The issue of Euro, which is the biggest innovation in today's international financial area, has greatly changed the international monetary system and realized the dream of regional monetary cooperation, also show the way to the East Asia.The countries of East Asia keep a closely relationships for a long time, however, they didn't pay enough attention to the monetary cooperation. The inner reason pushing the countries to aware of the emergency and realistic meaning of monetary cooperation is the Asia Financial Crisis in 1997. From the prospect of economic status, the East Asia is the fastest growing region all over the world with the highest potential, and has been recognized as the 'Troika" together with United States and European Union. At present, the US dollar leads the international monetary system and the Euro holds the second reserve currency that challenges the leadership of US dollar. As contrast, the East Asia, the third power of the world, still have no unified currency. The East Asia has to strengthen the monetary cooperation in order to maintain its position in the world economy.Even though there is an urgent need in monetary cooperation, the differences among every country are very huge and the scholars are doubt of its economic basis. This article uses the theory of Optimum Currency Areas and some related models to analyze the economic basis of the East Asia monetary cooperation so that can examine its possibilities.This article has 5 parts. The first part is Introduction which introduced the research method and the status of the academic study. The second part reviewed the background and achievement of the East Asia Monetary Cooperation. The third part mainly introduced the theoretical basis, preparing for the next part that will analyze the economic basis of the East Asia Monetary Cooperation. The forth part is the core of this article. Through two methods, Optimum Currency Areas Theory and OCA Index, this part analyzes and demonstrates the East Asia Monetary Cooperation. The last part discusses the role of China. According to the previous positive analysis, China should take the position of regional power and the first step is to strengthen the sub-regional economic and monetary cooperation and then gradually integrated into the whole process.