2.        Establishing the "core" of the index of macroeconomic robustness as related to the early warning system;

3.        Establishing, publicizing and implementing the Asian 10+3 Alliance's standard model symposium.

2.6  The Common Asian Bond Market

During the second annual Boao Forum, experts appealed for the construction of a basic framework for an Asian credit market to allow for the free flow of capital as a way to promote economic development in the region.  Still other experts suggested the priority of establishing agency institutions, and developing a unified mechanism of distribution and liquidation to calculate the transaction risks involved.  Furthermore, in order to develop the Asian currency market, a proposal was put forth to set up an extensive market association and to adopt the practices of a multiple currency in the bond market.

2.7  Common Asian Currency ---"Asian Dollar"

"The father of the Euro" Mundell believed that there could be three alternative options for the common Asian currency. The first option would be the Japanese yen.  However with the high amount of bad loans within its banking system, together with its geopolitical factors, the Japanese yen faces many obstacles to act as a common Asian currency.  The second option is the Chinese yuan, which has great potential while also facing its biggest problem of capital control.  The third option is for Asian countries to link up with the US dollar and to form a stable exchange rate regime.  And this would work as a solid basis for a common Asian currency, the "Asian dollar".

3.  Policies Already Adopted

After the Asian financial crisis, Asian countries utilized the10+3 mechanism, Asia-Pacific Economic Cooperation Organization, Executive's Meeting of East Asia-Pacific Central Banks (EMEAP), the Manila framework and other regional or global cooperation mechanisms to actively explore ways of strengthening regional financial cooperation.  They've established their extensive cooperation in areas such as setting up capital-aid mechanisms, monitoring the short-term cash flow, establishing early warning mechanisms, strengthening economic assessment and promoting dialogue on policy making. The following introduces some countermeasures already adopted in Asian financial cooperation.

3.1    Finance Cooperation within the Contents of the "Chiangmai Agreement" 

In May 2000, at the ASEAN 10+3 meeting, finance ministers reached the "Chiangmai Agreement" in Thailand.  It involved the following financial cooperation measures:

First, to make full use of the ASEAN 10+3 frameworks and strengthen exchanges of capital flow data and information.  Second, to expand the agreement of currency exchange among Asian countries while establishing bilateral currency exchange and bond transaction networks between ASEAN countries and the other three countries (China, Japan and Korea).  Third, in order to stabilize the regional monetary market, research on how to use foreign reserves of the ASEAN 10+3 countries in financial cooperation should be studied.

Presently, the 10 ASEAN member states have all joined the ASEAN multilateral capital exchange agreements. China, Japan and Korea have already formed mutual currency exchange mechanisms with each other respectively.  They are also now signing for agreements on bilateral capital exchange with other ASEAN member states.

3.2    Asian bond fund

On June 2, 2003 the central banks of 11 countries in the Asia-Pacific region declared to contribute 10 billion US dollars together to set up the Asian bond fund as a source of investment on US dollar bonds issued by East Asian countries.  On June 22, 2003 the meeting of foreign ministers of the Asia Cooperation Dialogue (ACD) was held in Chiangmai, Thailand.  Foreign ministers from 18 Asian countries brought out the "Chiangmai Declaration", which expressed their common will in developing the Asian bond market.

3.3    Arrangement for Currency Exchange

On May 2000, in the annual meeting of the Asian Development Bank held in Chiangmai, Thailand, finance ministers from 13 countries all agreed to establish currency exchange arrangements.  This is a mechanism for Asian nations to protect themselves against financial crisis induced by lack of liquidity. In 2001, Japan, Korea, Malaysia, Thailand, Philippines and China concluded agreements on bilateral currency exchange arrangements.  In 2002, China and Japan concluded one such an agreement as well.

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