Reflections on Financial and Monetary Developments in Asia

The economies of Asia are again a focus of the attention of international economic organizations, multinational enterprises, investment banks, and hedge funds. After having been thought of as a dynamic growth pole in the early and mid-1990s, the region was somewhat forgotten, at least as a place to invest one’s capital, in the immediate aftermath of the financial crisis of 1997–98. Now, as China has grown to become the fourth largest economy in the world and continues to grow at breakneck speed, as Japan appears to be coming out of a decade-long economic slump, and as other economies in the region are showing signs of healthy growth, the region is back on the radar screen of international investors and commentators. With the rise of China as a major manufacturing hub, the region has seen a remarkable increase in economic integration as measured by trade in goods. For example, since the late 1990s, intraregional trade has accounted for over half the growth in the exports of the emerging economies in the region (Zebregs 2004). While the integration of financial markets is lagging, important initiatives are being proposed, and concrete actions have been taken to deepen this integration. Further developments are likely to lead to significant changes in financial relationships among the economies in the region in the years to come. Although full monetar