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KEI Spotlight

KEI Director Kyle Ferrier on Asia’s Financial Safety Net

May 16, 2019

Writing for the Diplomat magazine, KEI's Kyle Ferrier brings readers' attention to the decision by ASEAN +3 (Korea, China, and Japan) to add local currencies to the dollar-denominated regional currency swap arrangement. Although the Korean won will likely not be in contention as the currency to complement the U.S. dollar in intra-region swaps, the proposal opens a path for Seoul to play a more robust role in the region's financial order. 

With the regional currency swap fund under the Chiang Mai Initiatiative growing both in size and autonomy from the IMF, it will have to contend with an internal rivalrly between the Japanese yen and the Chinese yuan. In this environment, Seoul is seen throughout the region as an impartial actor without the geopolitical aspirations of its two larger neighbors. As such, it is well positioned to arbitrate intra-regional disputes.  As such Korea may hold the key to building a more functional regional financial governance.

Read the full article here