International Monetary Study

Highlights of this Course

Since the birth of the euro in 1999, the international monetary system finds itself in a slow but historical transition from the uni-polar system of the US dollar hegemony to a bipolar or multi-polar system of the US dollar, euro and possibly Asian currencies.
The purpose of the lecture is to understand current monetary issues in East Asia after the Asian crisis, and to search for a new monetary order in the region with the backdrop of the above-mentioned global change, drawing lessons from the European experience of regional integration in real and monetary economies.
The autumn semester covers the history of European integration leading to the EMU (Economic and Monetary Union), and contemporary economic issues in the euro area. The spring semester concentrates itself upon monetary issues in East Asia such as the Chinese yuan (renminbi), Hong Kong dollar, Japanese yen and the Asian crisis. The two semesters are structured independently from each other, although students would obtain deeper insight by taking both.


2004 / Second semester
Graduate School
General Education
Instructor name
Tetsuji MURASE(Professor)


Term 2004 Autumn semester & 2005 Spring semester
Outline and Purpose of the Course
International Monetary Study, I
---- In Search of a New Monetary Order in Asia

History and Contemporary Issues of the Euro Economy

The international monetary framework is now in the process of gradual, but fundamental transition. In the past half century, the US dollar enjoyed the status of an unchallenged international key currency, playing the role of a gravity center of the world monetary order. The introduction of the euro in 1999 is likely to change the whole picture of the post-war monetary hierarchy. The single currency of the European Economic and Monetary Union (EMU) will gain its importance as a second key currency, thus transforming the inherited unipolar monetary system to a bipolar one.
In the face of such an irrevocable movement in the relative weight of the American and European currencies, Asian economies, damaged heavily by the Asian financial crisis, have not found a clear direction yet as to what kind of monetary regime is most appropriate for their economic development and stability in the future. Presently there is no existence of a monetary system or order which can be collectively called the Asian Monetary Order. Japan, with by far the largest GDP share in Asia, has failed so far to make the yen the leading currency in the region. Should each Asian country go its own way in adopting its currency/exchange regime, as they did before the Asian crisis? Should Asia, as a regional bloc, cooperate to establish a new regional monetary arrangement, independent of the US dollar or euro zones? What role should and can the Japanese yen play in Asia and the world?
The introduction of the euro, which breaks the accustomed rule of one country-one currency, is an unprecedented experiment. Asian countries can learn useful lessons for the possible monetary order in the region by studying its history and contemporary issues of political and economic implications.
As it is essential for the analysis of monetary affairs to understand features of the real economy, which is the other side of the same coin, this course will cover a variety of topics in the fields of monetary and real economies from Europe to Asia, and especially Japan. Comparison will be made between European and Asian/Japanese economies. Course attendants are expected to participate in discussions in the class.
We will study the European monetary experiment in Part I of the class in order to deepen our understanding of the current trend in the international monetary affairs, and to prepare for discussions about the currency issues in Asia in the second semester.

The euro has a history of 70 years so far as political idealism is concerned, 50 years in the economic integration process and 30 years in the monetary aspect. It is an outcome of political consideration rather than fulfillment of strict economic conditions. The double-decker structure of macroeconomic policy decision making is often described as an adventure. The EMU is still open to arguments whether it forms an optimum currency area. Regardless of criticisms expressed mainly by Anglo-Saxon academics, however, it seems certain that the birth of the euro gives a substantial impact to the existing world monetary order, which could be compared to the solar planet system with the US dollar in the middle.

International Monetary Study, II
---- In Search of a New Monetary Order in Asia
Asian Currencies and Yen-----In Search of a New Asian Monetary Order

As to the background information of the lecture, please refer to International Monetary Study I.

The Asian financial crisis delivered countries in the region indispensable lessons as to the importance of currency regime, stability of financial systems and sound macroeconomic management. In the age of IT revolution and massive movement of capital, however, it is doubtful whether individual countries can prevent separately the repetition of crises, even if utmost cautious economic policies are implemented.
Against the background of dual economic trends in the world -- (a) massive capital movements and (b) globalization with regionalism in Europe and Western Hemisphere -- in terms of trade, investment and monetary zone, we discuss pros and cons of a possible monetary arrangement in the East Asian* region. Major prerequisites are convergence of real economies in East Asia and regaining of confidence in the Japanese yen. The experience of EMU offers us valuable guidelines in the discussion. (* The word East Asia in the class means 4 ASEAN countries, 4 NIEs and China. Japan will be often treated separately due to its economic scale. Oceania will be included as the case may require.)
Schedule and Contents
I. The Autumn semester (October-January)
#1 The Course Overview
#2 The Way to the Euro (1)
#3 The Way to the Euro (2)
#4 The Way to the Euro (3)
#5 The Way to the Euro (4)
#6 Economic Policies in the Euro Area (1)
#7 Economic Policies in the Euro Area (2)
#8 Medium- to Long-term Risks of the Euro
#9 The Euro and the International Monetary System

II. The Spring semester (April-July)
#1 The Course Overview
#2 The Chinese renminbi or yuan
#3 The Hong Kong dollar
#4 The Asian crisis and its background
#5 The Recovery of East Asian economies and the role of Japan
#6 The Internationalization of the yen
#7 Towards an Asian Zone of Monetary Stability
Evaluation Methods and Policy
[Grading policy]
mid-term report: 40%
term-end test: 60%
References, etc.

[1] Tetsuji MURASE : A Zone of Asian Monetary Stability, Asia Pacific Press, 2002

[2] Tetsuji MURASE : Ajia antei tuukaken, Keisoh Syobo, 2000