Reappraising Japan’s proposal for an Asian Monetary Fund

At the Annual Meeting of the World Bank and the IMF in Hong Kong on September 21st, 1997, soon after the collapse of the Thai baht in July and the subsequent outburst of the East-Asian currency crisis, the Japanese Finance Minister Hiroshi Mitsuzuka officially proposed the creation of a $100 billion Asian Monetary Fund. Surprisingly, the proposal excluded any involvement from the USA and the IMF, causing their violent negative reaction and veto. Until then, Japan had always involved the USA in Asian regional integration. Although such initiative would radically change the course of regional financial integration in East-Asia and the global balance of power in the forthcoming decades, it received attention only by very specialized authors, who concentrated on single, fragmented explanations of an issue that was multifaceted and complex. The aim of this paper is to reappraise this affair and provide a comprehensive picture of the relevant issues at stake, reconstructing the intertwined relationships between – and highlighting the relative role of – economic theories, financial dynamics, and political/strategic considerations.