Title: Promoting a greater financial stability after the 1997 and subprime crisis: exploring the opportunity of a regional monetary unit in East Asia

Authors: Yves Rannou

Addresses: Laboratoire Ecole Doctorale CEREGE, 20, rue Guillaume VII le Troubadour BP 639 – 86022, Poitiers Cedex, France

Abstract: After the first Asian currency crisis, a financial turmoil has recently dragged the global economy along for the ride. We propose a roadmap for strengthening financial architecture in East Asia in confirming a scope for deeper monetary integration on the basis of their symmetry in macroeconomic disturbances. Specifically, we verify empirically via the Bayoumi and Eichengreen vector autoregression (VAR) approach the incidences of transitory and permanent shocks as a way of identifying plausible candidates to form an optimum currency area. A regional monetary integration would be to start with smaller sub-groupings that could culminate in a single currency area.

Keywords: exchange rates; structural vector autoregression; optimum currency area; OCA; correlated shocks; regional monetary integration; East Asia; Asian currency crisis; financial crisis; subprime crisis; regional monetary units; transitory shocks; permanent shocks; single currency.

DOI: 10.1504/AAJFA.2011.041630

Afro-Asian Journal of Finance and Accounting, 2011 Vol.2 No.3, pp.210 - 229

Published online: 28 Jul 2011 *

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