The Post-Crisis Sequencing of Economic Integration in Asia: Trade as a Complement to a Monetary Future

Bilateral and regional cooperation initiatives in Asia have been growing in importance over the last five years. These accords span the real and financial sectors; rather than following the more typical pattern of “trade first, money later”, recent policy initiatives involve the simultaneous implementation of trade and monetary/financial accords. Given this sequence, is there a case for monetary union in East Asia? Is there a case for expanded free-trade areas (FTAs) in the region? This paper argues that, at present, the post-sequencing of economic integration in Asia is developing such that trade agreements will ultimately complement the movement toward financial and monetary integration. While the political exigencies associated with monetary union pose serious challenges, it is argued that FTAs should help relax this constraint.