The Political Foundation of the East Asia Monetary Order: From Single Dominance to Joint Leadership

　　Abstract: From the beginning of the Chiang Mai Initiative (CMI) to the establishment of the East Asia Foreign Exchange Reserve Pool, the past ten plus years since the Asian Financial Crisis have brought a certain level of success in East Asian currency cooperation. However, as the region moves towards the next step in its economic integration and faces practical demands stemming from the U. S. dollar crisis, the overall progress of monetary order construction in East Asia remains less than what might be considered satisfactory, particularly when compared with the rapid progress in currency cooperation in other regions. This article points out that regardless of whether one considers the monetary system at the global level or the regional level, both reflect the international political order, and rely on the influence of international political leadership. The establishment of the East Asian monetary order is not an autonomous product of economic integration, but is an outcome of the efforts of political elites at the regional level. For this reason, explanations of East Asian currency cooperation must be developed through the lens of international political economy. On this basis, it is argued that the political foundation of the East Asian monetary order has passed through a phase during which Japan unilaterally guided the order to one in which China and Japan provide joint leadership. This is reflected in the start of the Chiang Mai Initiative and the establishment of the East Asian Foreign Exchange Reserve Pool. The transformation of the political foundation and the relative change in strength of political leadership can explain the progress that has already been made in East Asian currency cooperation, and further explains why this progress falls short of what is considered satisfactory. Whether or not East Asia can establish a regional monetary system that is independent of the influence of the U. S. Dollar depends on whether China and Japan can effectively assert joint political leadership.