ABSTRACT
In the wake of the Asian financial crisis (AFC) of 1997–98, Japan made an important shift in its foreign economic policy with regards to the way in which it approached regional institution building for East Asian monetary and financial cooperation. 2 Prior to the AFC, Japan endorsed “open regionalism” to trade, investment, and monetary cooperation in the loosely institutionalized Asia-Pacific Economic Cooperation (APEC). By contrast, Japan has been the leading advocate of “exclusionary” institution-building efforts in the region’s monetary and financial affairs since the late 1990s. By “exclusionary” is meant that Japan has not included the United States in these processes. Japan proposed and helped to materialize two major exclusionary institution-building measures for East Asia’s monetary/financial cooperation: the Chiang Mai Initiative (CMI, in 2000) and the multilateralization of the CMI potentially for future needs of the Asian Monetary Fund (2007). In addition, in December 2002, Japan proposed the idea of the Asian Bond Market Initiative (ABMI), which is aimed at developing regional financial markets that could issue local bonds denominated in local currencies. Finally, Japan established the “Kobe Study Group” for the monetary integration process in East Asia in 2002. Following up on this establishment, in 2006 Japan played a pivotal role in having ASEAN Plus Three (APT) agree to study the feasibility of developing the Asian Currency Unit (ACU), modeled after the European Currency Unit (ECU). The United States has not been included in any of these regional initiatives.
