International Financial Architecture: From a Viewpoint of International Currency
2002 Volume 2002 Issue 53 Pages 72-91
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2002 Volume 2002 Issue 53 Pages 72-91
From our experiences of some large currency crises in 1990's, we are rebuilding an international financial architecture that will prevent any currency crises.This paper focuses on international currencies and exchange rate regimes to consider a crisis-proof international financial architecture.At first, “two corner solutions”and an intermediate exchange rate system are compared with each other for a crisis-proof exchange rate system.Next, although a lesson of the Asian currency crisis tells us that a de facto dollar peg was dangerous for East Asian countries, it points out stronger linkage of East Asian currencies with the US dollar in recent years. Both inertia in a position of the US dollar as a key currency and a coordination failure in choosing exchange rate system are regarded as its causes.The latter suggests that it is necessary to make international coordination in choosing an optimal exchange rate regime and, in the long run, international monetary union in East Asia.
