Jeju Peace Institute

Since 2013, there has been a pronounced need for cooperation with regard to a financial safety net on both global and regional levels under the leadership of the G20 and the IMF. The policy cooperation for a financial safety net on global and regional dimensions may, paradoxically, weaken the legitimacy and function of financial cooperation in East Asia. From the perspective of East Asia, although policy cooperation with the IMF is a necessity, it may prove to be a double-edged sword depending on its conditions and structure, based on the current status of financial cooperation in East Asia. The negative possibility implied in the metaphor of a double-edged sword is that financial cooperation in East Asia may eventually operate as a mere junior partner to the IMF. Therefore, now more than ever, there is an urgent need for capacity-building with regard to financial cooperation in East Asia. The 2018 ASEAN+3 summit is an opportunity and challenge for Korea’s financial diplomacy. In the coming year, Korea will serve as the joint chair country of the 2018 ASEAN+3 summit, and face an opportunity to lead capacity-building efforts for financial cooperation in East Asia. In particular, the Chiang Mai Initiative Multilateralization (CMIM) concluded by the ASEAN+3 in 2010 will be reviewed for the first time to be revised at the 2018 summit, while the 2018 summit will determine the success or failure of financial cooperation in East Asia. In this context, this report presents the following three policy directions for Korea’s financial diplomacy toward a new leap forward for financial cooperation in East Asia. The first is the establishment of “We-Ownership” for financial cooperation in East Asia. The second is the reflexive contextualization of the “moral hazard discourse” that occasionally emerges in the negotiation process, and the reinforcement of trust among member states through the said effort. The last is the discourse diplomacy to share a vision to present financial cooperation in East Asia as a model for financial cooperation in other regions, beyond a means of “systemic survival.”