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East Asian countries were urged to form a cooperative system capable of raising the U.S. dollar as soon as possible in order to prevent the reoccurrence of a global financial crisis.

It was also pointed out that Asia should expand the Chiang Mai Initiative (CMI) introduced in 2000 and launch an Asia Monetary Fund (AMF), a monetary organization within the Asian region.

Maeil Business Newspaper invited economic experts from South Korea, China, Japan, and the U.S. and co-hosted a panel discussion themed “economic collaborative actions in the post-crisis period” on November 17 (local time) at Columbia University in New York with the Jerome A. Chazen Institute of International Business at Columbia Business School.

Shang-Jin Wei, director of the Jerome A. Chazen Institute of International Business at Columbia Business School, who has worked at the International Monetary Fund (IMF) as well as the World Bank said, “Regional collaboration such as the CMI and programs like an AMF should be further promoted. The competition among these plans would be necessary and desirable.”

Hugh Patrick, Director of Center on Japanese Economy and Business at Columbia University stated, “We may have a competition-- a healthy one that can be helpful to everybody-- among CMI, AMF, IMF and the Fed when SWAP agreements or the CMI become effective.”

“For a liquidity crisis, an effort to provide liquidity without conditions of economic restructuring such as a swap agreement like CMI, swap agreements between Federal Reserve and many countries, and the new Flexible Credit Line (FCL) implemented in 2009 at IMF (International Monetary Fund) is desirable. An Asian monitoring and surveillance mechanism, when established, will be an effective system to prevent a future crisis,” said Professor Takatoshi Ito at the Graduate School of Economics and the Graduate School of Public Policy, University of Tokyo serving as Deputy Vice Minister for International Affaires at Ministry of Finance, Japan.

“First, we need to make the size of the current CMI substantially bigger. Currently, we have $120 billion. However, the total amount of foreign exchange reserves in the East Asian region is forecast to amount to roughly $4 trillion. If only 10 percent of this is devoted to CMI, it would be more meaningful than now,” said Lee Doo-won, Professor at School of Economics, Yonsei University. In short, he called for expansion of Chiang Mai Initiative from the current $120 billion to $400 billion.

The panelists pointed out that the success of East Asian economic cooperation depends on political cooperation between China and Japan. “The biggest challenge for East Asia is how to deal with the U.S. Regional integration in East Asia cannot be exclusionary, but has to remain open. Political leadership and collaborative efforts between China and Japan are significant,” said Professor Patrick. In short, the foundation of AMF hinges on how well Japan and China cooperates and deal with the U.S.

Key Word: the Chiang Mai Initiative (CMI) refers to an initiative under the ASEAN+3 framework to prevent a relapse of another Asian Financial Crisis by securing a bilateral SWAP deal in the region. The initiative was reached at the ASEAN+3 Finance Minister's Meeting in May 2000.

[written by Myung-soo Kim, Eun-jung Kim-Yen-mi Hong/ edited by Jae-yoon Jung]

Please refer to the following link for the summary of this panel discussion:
http://news.mk.co.kr/english/newsRead.php?sc=30800003&cm=Economy&year=2009&no=607670&selFlag=sc&relatedcode=&wonNo=&sID=308