CJS Noon Lecture ~ "The Future of Regional Liquidity Arrangement in East Asia: Lesson from the Global Financial Crisis"

The global financial crisis of 2008-09 presented a critical challenge to East Asian regional financial cooperation. Over a decade of efforts to reduce regional vulnerability to financial crisis and contagion were confronted with the worst global economic crisis since the 1930s. The results for East Asia were mixed. On the one hand, none were forced to submit to IMF-led bailouts, as had happened so painfully in 1997-98. On the other hand, the most highly-developed component of the project of ASEAN+3 financial regionalism—the Chiang Mai Initiative (CMI), which set up a system of emergency liquidity provision—appeared irrelevant, as the central banks of South Korea and Singapore prioritized the establishment of new swap agreements with the United States as a means of ensuring dollar liquidity instead of relying on their Chiang Mai partners. Nonetheless, in May 2009, the ASEAN+3 finance ministers agreed to a substantial expansion and “multilateralization” of the initiative. This paper critically addresses whether CMI is likely transformed into an “Asian Monetary Fund” and examines the potential for the redesigned Chiang Mai Initiative to address the challenge of a future large-scale crisis.
William W. Grimes is a Professor of International Relations and Political Science at Boston University. He is the author of "Currency and Contest in East Asia: The Great Power Politics of Financial Regionalism" (Cornell, 2009) and "Unmaking the Japanese Miracle: Macroeconomic Politics, 1985-2000" (Cornell, 2001) and numerous articles on Japanese and East Asian political economy.