Regional and Multilateral Surveillance: Normative Tensions and Implications for Cooperation in East Asia

Financial crises have underscored two important points for East Asia's economic and financial stability and resilience: regional economies must become more self-reliant while acknowledging that the growing interdependence has intensified the need for cooperation. Reconciling the need for self-reliance with the reality of increasing interdependence has critical implications for East Asian financial regionalism as it drives how regional and multilateral processes link and interact with each other. This article explores how normative tensions can limit coordination of regional and multilateral surveillance mechanisms and investigates whether the 2008 global financial crisis has changed the normative dynamics in surveillance. Studies on the interaction of ideas and interests and its impact on financial governance have made important contributions to discussions on postcrisis reform. However, current analyses tend to overlook how normative tensions drive collective action between regional and multilateral levels. Furthermore, existing research in this field tends to focus on processes of change and devote little attention to cases wherein it might result in stasis instead. This article focuses on how two trends – the growing divergence in conceptions of financial risk and stability and the loss of an intellectual compass to guide the surveillance agenda – may hinder deeper cooperation between regional and multilateral surveillance mechanisms in East Asia.

Effective surveillance requires action at the bilateral, regional and multilateral levels. In the case of East Asia, there are general principles and informal agreements supporting regional and multilateral surveillance cooperation but they provide weak and inadequate guidance.
The shifts in postcrisis normative dynamics, as embodied in the differences in conceptions of financial risk and stability and the loss of an intellectual compass to guide the surveillance agenda, further decrease the likelihood that specific modalities for cooperation between the regional and multilateral mechanisms will be promoted.
Nonetheless, the need for cooperation and the importance of setting formal and explicit mechanisms is essential to regional and global stability. Normative tensions need not hinder further cooperation in terms of institutionalised regional representation and formal mechanisms for consultation and information sharing.