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Globalism and Regionalism: The East Asian Currency Crisis and Institutional Building

  • Motoshi SuzukiEmail author
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Part of the The Political Economy of the Asia Pacific book series (PEAP)

Abstract

Two issues arise when building a regional institution. States must coordinate their choices on the arrangements, which is often complicated by asymmetric information where states have differing expectations about appropriate institutional arrangements. In East Asia, coordination and information problems are aggravated by regional rivalries that constrain the flow of interstate communications. This chapter analyzes these problems using game-theory models with empirical references to the East Asian currency crisis and subsequent efforts at building a regional currency management institution. Successful institutional building promotes information sharing and the convergence of states’ expectations, which facilitate coordination through either an interstate (intra-regional) communication channel or delegation to a global (extra-regional) institution. Indeed, while creating a regional agreement on foreign reserve swaps between states’ central banks or the Chiang Mai Initiative (CMI) to prevent another crisis, East Asian states used an institutional link to the International Monetary Fund (IMF) as a mechanism to overcome these problems and relied on an intra-regional communication channel, the ASEAN plus Three (APT) framework, to realize a more autonomous CMI and to reduce regional rivalries.

Keywords

Communication Asymmetric information Cheap talk Chiang-Mai Initiative (CMI) International Monetary Fund (IMF) 

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Copyright information

© Springer Japan KK 2017

Authors and Affiliations

  1. 1.Graduate School of LawKyoto UniversityKyotoJapan

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