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The financial crises of the late 1990s marked an intellectual watershed for the global economy, and also for regionalism as the Janus face of globalisation. At the beginning of the 21 st century, the theory and practice of regional cooperation and integration may evolve along different lines to how it was understood for most of the second half of the 20 th century. In East Asia, in particular, this will mean that the relationship between multilateralism and regionalism will change. The 'East Asian' region will become an increasingly important domain within which to explore enhanced protection against financial crises. What we might call 'monetary regionalism', sceptical western voices notwithstanding, is now firmly on the regional agenda in East Asia. Within conventional political economy, the theory and practice of monetary regionalism is not as easy to understand as traditional trade driven regional integration. Thus one aim of this paper is to outline a theory of monetary regionalism and demonstrate the degree to which it represents a sharp break with understandings of the regional project that pertained in East Asia prior to the late 1990s. From its start in 1989, APEC claimed to be a new type of regionalism. The promise was that APEC would promote open regionalism, i.e. the development of an approach to regional integration that would not harm the multilateral trading order. APEC, despite substantial peer pressure, did not achieve this goal. That APEC played any significant role in the advancement of regional trade integration cannot be proven. What can be said, however, is that it provided no support to its Asian members during the financial crises of the late 1990s. At the same time, more traditional (what we might call Balassian) understandings of trade driven regional integration are not showing any sign of decreasing importance, To the contrary, there is a growing appeal of trade cooperation , notably an increasing interest in bilateral preferential trading arrangements. This leads to a complex picture of competing regional initiatives across the economic policy spectrum. The paper locates these initiatives in the wider context of the growing politico-economic dialogue between Southeast and Northeast Asia that has developed via the ASEAN+3 process since 1997.

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Abstract:The financial crises of the late 1990s have marked a watershed for the global economy and for regionalism. Prior to these crises, deregulation and liberalisation, in particular of financial markets, enjoyed widespread support. On the other hand, regional integration was aimed at improving conditions for regional trade and was based on Bela Balassa's forty year old theory of regional integration. At the beginning of the 21 st century, the theoretical approach to regional integration will have to be a different one. Regionalism will have to offer enhanced protection against financial crises, whereas trade liberalisation in an era of rapid trade liberalisation both offers fewer benefits and may be too complicated to implement due to high administrative costs associated in particular with free trade areas. The aim of this paper is to provide a theoretical framework for the emerging new monetary regionalism. Regions that wish to strengthen their co-operation in monetary and financial affairs today have the option of regionalism without trade agreements. East Asia is the most likely candidate for the implementation of monetary regionalism, also because East Asian policy makers continue to be frustrated with the lack of progress in the IMF's reform process.