Abstract

This paper seeks to understand the changing financial landscape in East Asia that resulted from ongoing regional financial cooperation among ASEAN+3 countries. It examines the development of the Chiang-Mai Initiative Multilateralisation (CMIM), which is aimed to provide regional financial safety nets in times of crisis, and the promotion of regional bond markets under the Asian Bond Market Initiative (ABMI), particularly the Credit Guarantee Investment Facility (CGIF), in order to explain the changes that occur to regional financial infrastructure and to evaluate their early implications, particularly with regard to the relationship with global financial governance and regional development goal of equitable and inclusive development. The main research questions are what kinds of rules are being put in place under these mechanisms and how they differ from the existing rules? What are the contributing factors or rationale behind the development of these mechanisms? And judging from their recent progress, what could be the implications of the CMIM and ABMI on existing global financial structures and regional development? Guided by an institutionalist approach, the paper argues that the CMIM and ABMI are designed to change the rules of the game in global finance in order to better serve regional and individual member’s needs and interests. These rules themselves are largely shaped by the global political economy context, power relations among members, existing practices and models, and regional identity. While both the CMIM and ABMI contribute positively to the integration process, the results are mixed when measured against ASEAN’s goal of equitable and inclusive development. Despite having laid down some infrastructure and decision-making procedures that are compatible with this objective, the differences in member countries’ level of development and financial capacity, the pursuit of multiple objectives and the lack of substantive discussion on within-country inequality can be major obstacles toward equitable and inclusive growth.