Introduction

Since the turn of the century, countries in Southeast and East Asia have been embracing regional cooperation and integration in monetary and financial affairs. The 1997–8 Asian crisis, the successful introduction of the euro and, more recently, the collapse of the hitherto praised Anglo-Saxon model have been important catalysts for this emerging process. The Asian crisis demonstrated the lack of options for emerging economies in financial crisis. The policies of the International Monetary Fund (IMF) were suboptimal to say the least, and revealed a clear lack of output legitimacy. The creation of a single currency in Europe then showed that such integration was possible in practice, and not just in theory. Asian observers see that the euro is providing enhanced economic stability and strengthening Europe's position in global affairs. This, of course, is important in a region where more and more citizens wish to break free from the dominance of the United States in both economic and security affairs. More recently, the sub-prime crisis has reminded Asian policy-makers of the lectures they endured in 1997 and 1998: personal ties between lenders and borrowers were then termed ‘crony capitalism’. Today we see that the American financial system has generated the largest financial crisis since the Great Depression, while we even hear calls for a return to ‘good old fashioned banking’.