ABSTRACT
Financial stability in any region of the world would require an effective regional financial arrangement, which complements the global financial arrangement led by the International Monetary Fund (IMF). This chapter explores the challenges faced by the Chiang Mai Initiative Multilateralization (CMIM), the Economic Review and Policy Dialogue (ERPD), and the ASEAN+3 Macroeconomic Research Office (AMRO) to promote regional financial stability. It discusses the experiences of regional financial arrangements developed in other parts of the world, particularly in Europe, to draw lessons for Asia. The chapter summarizes lessons learned from past financial crises, such as the Asian and global financial crises, and argues how regional financial arrangements can help promote financial stability at the national and regional levels. Crisis prevention is important to create a strong international financial architecture to send early warnings, induce effective international policy coordination, and thereby reduce systemic risk internationally.
