Asian Regional Cooperation and Global Reform after the Financial Crisis

The world economy is entering a period of instability unseen since the 1930s, with important consequences for
international peace and security. Banking crises increase in frequency with global capital flows, and such flows
have recently exceeded the previous peak attained in the early twentieth century.1 Furthermore, the international financial system faces new, destabilizing challenges. The Japanese-style economic crisis has called into doubt the efficacy of conventional economic policy tools. In addition, the economic balance of power is shifting decisively away from the United States and toward broader East Asia. In the past, such power transitions have proved destabilizing to the world economy and international peace.2 Existing international institutions and arrangements are ill-equipped to handle these monumental shifts, and international cooperation within the G-20 has thus far failed to produce effective solutions. It is time to consider innovative reforms.