Economic interdependence and international coordination in East Asia

TheAsian currency crisis of 1997 taught several lessons. Before the currency crisis, monetary authorities in many East Asian countries adopted a de facto dollar peg system. As the US dollar appreciated from 1995 to 1997, this de facto dollar peg system dragged these currencies higher as well, hurting export competitiveness by causing an appreciation in the effective exchange rates of these countries, which trade with Japan, the European Union, and other countries as well as the United States. Accordingly, one of the lessons is that the de facto dollar peg system was dangerous for East Asian countries (Williamson 2000).