Bank of China bridge Macau Lucas Vallecillos Vwpics/ZumaPress

An Asian Community Can Wait

European countries may join the AIIB to deepen their business and political ties with China, but their financial stakes in the outcome are limited. Japan, however, has much to lose if the AIIB does not work according to plan, which is why it would be wise to wait before deciding whether to sign up.

TOKYO – In the world of international finance, conflicting monetary and exchange-rate policies compete for advantage and countries battle for influence over the rules of the game. After all, just as investors compete to maximize their profits, countries compete to ensure that international rules and norms are agreeable to them. That is why agreeing to an international economic regime – say, establishing a fixed exchange rate, or adopting a common currency – is a deeply political decision. And today’s Asia faces many such decisions.

Economic integration is a hot topic in the region. From the negotiation of the mega-regional Trans-Pacific Partnership to the establishment of China-led investment platforms – including the Silk Road Fund and, most recently, the Asian Infrastructure Investment Bank (AIIB) – Asia is becoming more interconnected than ever.

As a result, some observers may find the notion of increased monetary integration – even the establishment of a fixed exchange-rate regime based on, say, the Chinese renminbi or the Japanese yen – highly appealing. But I would argue that the flexible exchange rates that prevail today remain Asia’s best bet for boosting prosperity and protecting it from shocks.

To continue reading, please log in or enter your email address.

Registration is quick and easy and requires only your email address. If you already have an account with us, please log in. Or subscribe now for unlimited access.

required

Log in

http://prosyn.org/bgn0I6x;
  1. Patrick Kovarik/Getty Images

    The Summit of Climate Hopes

    Presidents, prime ministers, and policymakers gather in Paris today for the One Planet Summit. But with no senior US representative attending, is the 2015 Paris climate agreement still viable?

  2. Trump greets his supporters The Washington Post/Getty Images

    Populist Plutocracy and the Future of America

    • In the first year of his presidency, Donald Trump has consistently sold out the blue-collar, socially conservative whites who brought him to power, while pursuing policies to enrich his fellow plutocrats. 

    • Sooner or later, Trump's core supporters will wake up to this fact, so it is worth asking how far he might go to keep them on his side.
  3. Agents are bidding on at the auction of Leonardo da Vinci's 'Salvator Mundi' Eduardo Munoz Alvarez/Getty Images

    The Man Who Didn’t Save the World

    A Saudi prince has been revealed to be the buyer of Leonardo da Vinci's "Salvator Mundi," for which he spent $450.3 million. Had he given the money to the poor, as the subject of the painting instructed another rich man, he could have restored eyesight to nine million people, or enabled 13 million families to grow 50% more food.

  4.  An inside view of the 'AknRobotics' Anadolu Agency/Getty Images

    Two Myths About Automation

    While many people believe that technological progress and job destruction are accelerating dramatically, there is no evidence of either trend. In reality, total factor productivity, the best summary measure of the pace of technical change, has been stagnating since 2005 in the US and across the advanced-country world.

  5. A student shows a combo pictures of three dictators, Austrian born Hitler, Castro and Stalin with Viktor Orban Attila Kisbenedek/Getty Images

    The Hungarian Government’s Failed Campaign of Lies

    The Hungarian government has released the results of its "national consultation" on what it calls the "Soros Plan" to flood the country with Muslim migrants and refugees. But no such plan exists, only a taxpayer-funded propaganda campaign to help a corrupt administration deflect attention from its failure to fulfill Hungarians’ aspirations.

  6. Project Syndicate

    DEBATE: Should the Eurozone Impose Fiscal Union?

    French President Emmanuel Macron wants European leaders to appoint a eurozone finance minister as a way to ensure the single currency's long-term viability. But would it work, and, more fundamentally, is it necessary?

  7. The Year Ahead 2018

    The world’s leading thinkers and policymakers examine what’s come apart in the past year, and anticipate what will define the year ahead.

    Order now