Institutionalizing Financial Cooperation in East Asia: AMRO and the Future of the Chiang Mai Initiative Multilateralism

The global system was ill-prepared for the onset of the Asian financial crisis (AFC) in 1997. The only dedicated emergency liquidity mechanism to which the crisis-hit economies could turn was the International Monetary Fund (IMF), and the IMF had neither the lendable funds nor the analytical framework to manage the crisis.

In the aftermath of the AFC, East Asian countries sought to insulate themselves from a repeat of the crisis by building their own national reserves, pushing for IMF quota and facility reform and building a regional fund to help to prevent and manage crises. The Association of Southeast Asian Nations, plus China, Japan and the Republic of Korea (ASEAN+3) have also built the second largest regional emergency liquidity fund in the world, the Chiang Mai Initiative Multilateralization (CMIM). With a total commitment of $240 billion to aid member states facing a currency crisis, CMIM can provide more funds to members than the IMF. Nonetheless, CMIM continues to be functionally subordinate to IMF decisions.

A journal article published in Global Governance by William N. Kring and William W. Grimes finds that this may be changing following the 2011 creation of the ASEAN+3 Macroeconomic Research Office (AMRO). A regional mechanism to manage surveillance and design of CMIM lending programs, it has provided the ability to delegate surveillance and program design to an independent body – a crucial prerequisite to ending CMIM’s subordination to the IMF. AMRO seeks to ensure such autonomy through its institutional design.

This article seeks to provide a preliminary answer as to whether AMRO is moving toward fulfilling its mission of autonomy. The authors use indicators of effective delegation drawn from organizational theory and newly available information and data on AMRO to analyze its success. They conclude that it is too early to fully judge the potential of AMRO. The organization has come far in only seven years of existence, but it is limited by budgets, and will depend on the personalities and priorities of leadership and staff.