Financial Cooperation in the Asia-Pacific as Regime Complex: Explaining Patterns of Coverage, Membership and Rules

Since the 1997 Asian Financial Crisis, East Asia has gone from having virtually no regional financial cooperation to having multiple cooperative arrangements. In preparing for a future crisis, how would emergency mechanisms function to prevent and manage currency crises in East Asia?

A new journal article in International Relations of the Asia-Pacific from William Grimes, Yaechan Lee and William Kring focuses on the issue area of emergency liquidity provisions, where global (the International Monetary Fund), regional (Chiang Mai Initiative Multilateralization) and bilateral arrangements co-exist and overlap in complicated ways, forming a regime complex in East Asia. This article seeks to understand the political implications of this regime complex for promoting financial stability in the Asia-Pacific.

While analysis of the region cannot definitively answer all questions about how best to understand and analyze regime complexes, the authors note that it does offer a lens into the political characteristics of regime complexes and how political economists should go about analyzing them. The authors provide various approaches to the study of regime complexes and different ways in which asymmetries of power help to explain the contours of the regime complex. As it applies to East Asia, the authors argue that the evolution and current shape of the regime complex have been driven by the efforts of key states to take advantage of or thwart power asymmetries. The evolution of the Chiang Mai Initiative Multilateraliztion (CMIM), for example, reflects the political interest of its key members, particularly those of Japan and South Korea.

While many policymakers and economists have posed coordination as primarily a technical or institutional matter, the authors argue that institutional fixes do not eliminate the ability of key states to exert leverage through gaps or inconsistencies across layers of the regional safety net. Indeed, the expectation that institutional fixes solve these challenges may raise complacency about coordination failures, which provides further opportunities for political leverage if a country so chooses.