A Feasibility Study Among China, Japan And South Korea Monetary Cooperation

With the 2007 American subprime mortgage spreaded in global, the shortcomings of "dollar standard" are exposed and the need to reform the existing international mo netary system is much more important. One of the most important directions is to bui Id a basket of currencies dominated a reserve system actively and jointly. In order to achieve this goal, the first step is to actively build the regional monetary cooperation.In recent years, East Asian countries have been aware of the importance to prom ot regional monetary cooperation, such as the Chiang mai initiative. As the top three east Asian economy economic entities, the success of the regional monetary cooperatio n among China, South Korea and Japan will no doubt have a major impact on east Asia economy, and even the world economy. Therefore, the exploration of the feasibil ity of regional currency cooperation among them is significance.In this background, based on the OCA theory, this thesis constructed the OCA in dex system of China, South Korea and Japan, built the the OCA index equation, and then estimated the cooperation costs among China, South Korea and Japan. In addition, this thesis used the data to analyze the change trend of the cooperation costs among China, South Korea and Japan before and after the financial crisis. Then combined w ith the current macro environment, from the economic openness degree, trade coupling degree, trade structure, the degree of economic development, the difference of econo mic policy among China, Japan and South Korea, this thesis carried a comprehensive analysis about the feasibility of monetary cooperation and the main difficulties of Chin a, Japan and South Korea monetary cooperation.The empirical results showed that the cost of monetary cooperation among China, South Korea and Japan has reduced, but still relatively high, and presented a strong instability.The cost of monetary cooperation between China and South Korea is signifi cantly lower than the cost between China and Japan. In addition, the financial crisis h ad a different influence on China, Japan and South Korea. The outbreak of the Asian financial crisis had prompted the three countries to trengthen the monetary cooperatio n mechanism between each other, and reduced the cooperation costs. But the US subp rime mortgage crisis hindered the further development of cooperation in some degress and increased the monetary cooperation costs. In conclusion, there are some foundation s among China, Japan and South Korea to carry monetary cooperation, but in order to build a stable monetary cooperation system, there is still a relatively long way to go.