Asian financial cooperation: The problem of legitimacy in global financial governance

Abstract

In this article, I show an important connection between global financial governance and Asian regional financial governance. My findings suggest that unless the G7-dominated global financial institutions resolve the legitimacy problems, which involve inclusiveness, rule-governance, and fair returns, Asian developing countries are unlikely to place whole stock in global solutions created to deal with global (and regional) financial issues. The perceived deficiency of political legitimacy, even in the post-Asian crisis global financial architecture, drives Asian countries to become rule makers rather than rule takers through the new regional financial arrangements, such as the Bilateral Swap Arrangement under the Chiang Mai Initiative and the Asian Bond Fund.