The purpose of this paper is to provide a view on the current process and future prospects for regional financial and monetary cooperation in East Asia. Looking forward, financial cooperation in East Asia will be evolutionary. For over a half century, European countries worked hard to develop various institutional frameworks which encouraged their cooperation on monetary and financial matters. If the European experience is any guide, it may take many years to develop effective cooperative arrangements and institutions in East Asia. However, there may be a breakthrough over the next few years as we gain a better understanding of the economic consequences of European monetary unification. The enlargement of the EU in 2004, when eight central and East European countries are expected to be admitted, will also have a large impact on the way East Asian policymakers think about regionalization in East Asia.

Executive Summary

I. Introduction

II. Overview of the Chiang Mai Initiative (CMI)

III. Creation of Monitoring and Surveillance System

IV. Barriers to Financial Cooperation and Integration

V. Future Prospects

References