The purpose of this thesis is to analyze the current situation of 3 Northeast Asian countries, China, Korea, and Japan for the possibility on the currency integration focusing on the role of Chinese Yuan whose role is rapidly increased in Asia region....
The purpose of this thesis is to analyze the current situation of 3 Northeast Asian countries, China, Korea, and Japan for the possibility on the currency integration focusing on the role of Chinese Yuan whose role is rapidly increased in Asia region.
Globalization and regional economic integration is the two important trends in the world's development. Europe is in front of the regional integration in the development. After the Euro achieving a single currency after the completion of the unified European market, North America has endeavored to build a free trade zone also to expand throughout the Americas. As the one of the world economic major centers, regional cooperation among the East Asian countries have started lately. In East Asia, the most prominent economic power is form the Northeast Asia.
Therefore, we say that the East Asian regional economic zone in Northeast Asia is more appropriate. At present, the Northeast Asia has shown the fastest possibility to develop a new type of trade transactions in which the world will be interested greatly.
Like launch the Euro, the dollar's position, first of all, is to make regional economic integration for monetary unification. Unified approach is for the currency market to stabilize prices and maintain economic stability and balanced development.
Currency unification will enable factors of production to distribute among countries within the regions by re-configuration, which is based on national economic development of the imbalance caused by factors of production.
Northeast Asia has good conditions for economic development, in capital, technology, natural resources, labor, and other factors of production.
Northeast Asia countries respectively, have different advantages. Therefore through economic cooperation, countries can develop the economy each other, and can provide the opportunity in the mutual market. This is for not only to countries to expand production, increase employment, but also greatly to enhance the economic competitiveness and its economic strength for making a Northeast Asian region fully vigorous and vitality as the hot spots in terms of economic growth.
To achieve this goal, the most in need, Northeast Asia is to enhance the economic strength, science and technology. Therefore the three countries (China, South Korea, Japan) should co-work together for using the economic advantages. However, for the accomplishment of monetary unification, it is very important that which country will drive for the unification of currencies. This is a very sensitive subject because the seigniorage(currency issuing gain for the key currency country) will be very important.
Therefore the goal of this paper is to compare the three countries’ economic strength, trade and investment as well as to suggest the possibility of the currency integration. This would be followed from the academic basis for establishing its dominance in Northeast Asia and monetary unification for the strategic needs.
When we judge the potential possibility based on China’s current rapid developing conditions, China has shown the leading economic power in Northeast Asia obviously. From the perspective of the exchange rate of the Yuan compared to the other two countries’ exchange rates, fluctuations are significantly smaller.
This is because China is using a real dollar pegged for the policy stability of the yuan exchange rate after the Asian financial crisis in 1997. On the other hand China is maintaining long-term economic growth both home and abroad markets that would be expected the good prospects on China's sustained economic growth. In addition, during the Asian financial crisis, maintaining the yuan exchange rate has made the China’ exchange rate stable in the world. And also China had won a high reputation and praise among East Asian nations.
These examples gradually make the yuan is not only important in Northeast Asia, but also further it would be prominent like Euro as a world key currency with providing possibility for the theoretical and real background.