Asian economies strengthened their monetary and currency management after the Asian financial crisis of 1997-1998, and came through the global financial crisis of 2007-2009 relatively well. Nevertheless, the recent global crisis has presented new challenges. This book develops recommendations for monetary and currency policy in Asian economies aimed at promoting macroeconomic and financial stability in an environment of global economic shocks and volatile capital flows.
Monetary and Currency Policy Management in Asia draws lessons from crises and makes concrete macroeconomic policy recommendations aimed at minimizing the impacts of an economic and financial downturn, and setting the stage for an early return to sustainable growth. The focus is on short-term measures related to the cycle. The three main areas addressed are: monetary policy measures, both conventional and unconventional, to achieve both macroeconomic and financial stability; exchange rate policy and foreign exchange reserve management, including the potential for regional cooperation to stabilize currency movements; and ways to ease the constraints on policy resulting from the so-called `impossible trinity' of fixed exchange rates, open capital accounts and independent monetary policy.
This is one of the first books since the global financial crisis to specifically and comprehensively address the implications of the crisis for monetary and currency policy in emerging market economies, especially in Asia. Presenting a broad menu of policy options for financial reform and regulation, the book will be of great interest to finance experts and policymakers in the region as well as academics and researchers of financial and Asian economics and also economic development.
Edited by Masahiro Kawai, Project Professor, Graduate School of Public Policy, The University of Tokyo, Peter J. Morgan, Senior Consulting Economist, Asian Development Bank Institute, Tokyo and Shinji Takagi, Professor, Graduate School of Economics, Osaka University, Japan
Contents: Preface 1. Monetary and Currency Policy Issues: An Overview Shinji Takagi PART I: MONETARY POLICY ISSUES 2. The Role and Effectiveness of Unconventional Monetary Policy Peter J. Morgan 3. Monetary Policy Strategies in the Asia and Pacific Region: Which Way Forward? Andrew Filardo and Hans Genberg PART II: EXCHANGE RATE POLICY AND RESERVE MANAGEMENT ISSUES 4. International Monetary Transmission and Exchange Rate Regimes: Floaters vs Non-floaters in East Asia Soyoung Kim and Doo Yong Yang 5. Macroeconomic Impacts of Foreign Exchange Reserve Accumulation: Theory and International Evidence Shin-ichi Fukuda and Yoshifumi Kon PART III: RECOMMENDATIONS RELATED TO THE `IMPOSSIBLE TRINITY' 6. The Financial Crisis, Rethinking of the Global Financial Architecture, and the Trilemma Joshua Aizenman, Menzie D. Chinn and Hiro Ito 7. Asia Confronts the Impossible Trinity Ila Patnaik and Ajay Shah PART IV: IMPACTS ON ASIA OF THE GLOBAL FINANCIAL CRISIS AND POLICY RESPONSES 8. Asia's Post-global Financial Crisis Adjustment: A Model-based Dynamic Analysis Masahiro Kawai and Fan Zhai PART V: REGIONAL COOPERATION ISSUES 9. A Proposal for Exchange Rate Policy Coordination in East Asia Masahiro Kawai and Shinji Takagi Index