Research On The Impact Of Cooperation And Competition Between RMB And The Yen On East Asian Regional Monetary System And Its Future Development

With the deepening of the process of economic globalization, currency regionalization has gained wide attention. Although East Asian Monetary Cooperation has achieved some success, yet in view of the special economic and political situation in East Asia, it has failed to have an currency which can act as the "Currency Anchor" and has broad implications to the whole East Asian regional monetary system to guide a deeper level of co-operation such as the coordination of exchange rate and the establishment of Common Monetary Area. As two major currencies in the area, the problem of competition or cooperation of the renminbi and the yen plays an important role in the development of monetary system in East Asia.At present, there are still many deficiencies in East Asian Monetary Cooperation, such as the scale of cooperation, institutionalized constraints and the cooperative initiative of various regional economies. In the future, there is a great space for development of the construction of regional foreign reserve poll, exchange rate coordination and promotion of the strategy of "de-dollarization". In view of the special politics, history, geography and culture of East Asia, the monetary integration degree can not be as mature as the euro area, but East Asian economies can promote the development of the monetary system on their characteristics. By adopting the step-by-step method, it can first form closer sub-regional in economies with similar level of economic development and then strengthen the link among the sub-regional from local to the whole, then build a regional reserve poll and strengthen the exchange rate, finally achieve all-round cooperation in East Asia area.At the moment, China’s economic power is continuously strengthened and the opening degree is increasing, RMB has played an important role no matter in the Asian financial crisis or in the global financial crisis in2008. China gradually began to play the role as "Market Provider" in East Asia. Meanwhile, as the value of RMB maintaining stability in a long-lasting period and a high sense of responsibility China showing in the global financial crisis, China’s economic and political status is growing in East Asia. The international reputation of yuan has greatly improved and gradually has the strength to compete with the yen. In comparison, Japan was affected by Asian financial crisis, Global Financial Crisis in2008and earthquake in2011, its international status and monetary position decreased significantly, even showed signs of reversal compared with the past. For a long time, the Japanese Yen has been in a dominant position in Asia. Japan is also committed to the idea of "Yen’s Internationalization" by "Yen Asianization". Japan’s current economic development level is still higher than China. In the short run, it’s difficult for China to become axis currency in East Asian monetary cooperation. While the yen is restricted to its specific political, historical, geographical problems in East Asia, it’s hard to become reality for yen to take a leading role in Asia.It is just based on the above variety of factors to consider, analysis of whether the two currencies choose to compete or cooperate and the impact to the whole East Asian monetary system is very necessary in the short term. As the largest developing country and the only developed country, competition for the nominal anchor between China and Japan is unavoidable. The competition between the renminbi and the yen is nothing more than to contain each other and seek the position of currency-led country in the area. But it is not conductive to produce the core currency and will have a huge impact for intra-regional trade and investment. Making a general survey of the current development status of the East Asian regional economies, with the deepening of mutual dependence, it has very important meaning for the economies within the region especially the major powers to cooperate to stabilize the regional monetary and financial order, promote regional monetary cooperation and boost the rise of non-hegemonic currency.In the long term, there are many constraints for the yen to become anchor currency, such as instability of the yen exchange rate, influence of unsuccessful internationalization of the yen. In addition, it is hard for Japan to become market provider of the area because the limitation of Japanese market size. In comparison, China has advantages over Japan in many ways, for example, the stability of exchange rate, degree of economic integration with neighboring countries, the role of market provider and so on. All these factors are conductive to the development of RMB regionalization. With increasing status of RMB in the process of East Asian regional monetary cooperation, how to learn form the experiences and lessons of yen’s internationalization and break our own constraints, making rational use of our peculiar advantages in East Asia, pushing forward RMB to playing an important role in East Asian monetary cooperation and then promoting the process of the entire East Asian monetary cooperation are so important today. It is also an important issue to find way out for the cooperation in current days.This paper focuses on the analysis of impact of the cooperation and competition between RMB and Japanese Yen to East Asian monetary system. Then explore the development model of monetary cooperation in East Asia in the future and the current situation and future trend of the cooperation and competition between RMB and Japanese Yen. Then analyze the pros and cons of the Sino-Japanese monetary cooperation and competition. Finally study what position of RMB and yen may obtained in the system and find the way out of regional development of RMB by researching the lessons we can learn and our own development strategy.