letter

Korean Peninsula

President, Akiyama Associates
Masahiro Akiyama

I have long engaged in Japan's relations with the US, China, Southeast Asia and India, but not with Japan's closest neighbor, South Korea. However I have recently become very concerned about the situation in the Korean Peninsula.

The first announced policy proposal set up last December by the SSDP (Society of Security and Diplomatic Policy Studies) that I launched last autumn was on the North Korea Problem. Last month the SSDP made public the emergency proposal on the same issue facing the seemingly contingency atmosphere.

http://ssdpaki.la.coocan.jp/en/proposals/4.html

I am also concerned about Japan-Korea relations. I believe we have much more important interest between both countries other than the comfort women issues. A newly established think-tank in Korea requested me to conduct a joint research project on Northeast Asia economic cooperation. I am working now as the coordinator in Japan for the project while I am deeply involved in the financing cooperation, one of the three sub-themes. The research proposal is as follows. Professor Masahiro Kawai and I will join the joint research meeting to be held in Seoul this month.

Financing Cooperation in Northeast Asia
- Research Proposal from Japan-

1 We discuss the concept of region and the sphere of Northeast Asia in considering a regional financing cooperation as one of the economic cooperation forms in Northeast Asia.

What is a region? In the image of regional community we discuss whether it is transnational or does it have anything to do with nations, what are the members of the community, whether they have common characteristics, do they share the same values, interests and transnational rules.

It is usually said that Northeast Asia comprises Japan, the Northeastern People's Republic of China, the Republic of Korea, the Democratic People's Republic of Korea, Mongolia and the Russia Far East. We verify it through the discussion mentioned above.

As far as community is concerned there are different types of community such as a security community, an economic community and a cultural community.

2 It is an important process that we examine the background against the idea of an East Asia Community, and the history, the concept and the future outlook to make our discussions fruitful. This process will give a useful direction to our discussion.

3 Necessary process is to learn the history, the framework and issues of financing cooperation in Asia, for making concrete our discussion on financing cooperation in Northeast Asia. We will obtain valueable suggestions through the process.

4 We have several issues over financing cooperation in the region as follows. What cooperation can we achieve and which financing cooperation is necessary and useful in this region are the points of discussion.

a Policy dialogue on macro-economy and financing cooperation:

Launching a dialogue among governments on financing cooperation in Northeast Asia and pursuing a framework for cooperation on macro-economy and financing development are useful. The foreign exchange policy would be discussed in the dialogue. The dialogue would be also considered as an information exchange mechanism.

b Financing development cooperation:

Financing cooperation in infrastructure for transportation, energy, environment, and in particular cross-bordered connectivity should be promoted. Strengthening the connectivity through shipping is important for Japan and the Republic of Korea. The Roles of the ADB, cooperation with the AIIB, the function of PPP, coordination with One Belt One Road, Grassland Road and the Eurasia Plan are to be discussed.

c Cooperation in the development of capital market:

Cooperation is necessary to introduce a financing mechanism through which they raise long-term funds in their currency. Enlargement of the idea of Asia Bond Market, nurturing pension funds and life security companies and pursuing issuance of basket currency bonds are discussed.

d Promoting mutual entry of financial institutions:

Financial services should be further liberalized so that banks, stock companies and life security companies of each country enter mutually. For China where there is emerging the shift from manufacturing industry to servicing one it is important to enlarge and strengthen financing services. Liberalization of financing services will be a critical issue in the Japan-China-Korea free trade agreement negotiation.

e Cooperation for financing safety network:

It is necessary to supply international liquidity in the case of rapid outflow of funds from a country. CNIN in ASEAN+3 was introduced for the case and it covers Korea. It would be useful that it be redesigned as a financing safety network in Northeast Asia by covering Mongolia.

f Cooperation in currency policy:

It is useful to use the currency of the other country in the trade and investment for the internationalizing of currency. Internationalizing the Chinese Yuen has slowed down the speed since late in 2014, the Japanese Yen has not yet full internationalized and the Korean Won is not internationalized. Mutual efforts will bring a further internationalizing of currency.

g Regional cooperation related to financial innovation:

Cooperation will be discussed over fintech, bitcoin, etc.

5 By observing the regional financing cooperation in Northeast Asia we examine the subject we have set in this research project, "Shaping Northeast Asia Cooperation Model".