The Japanese Financial Diplomacy in the Globalising International Financial Regime
For the Japanese government, financial diplomacy has been always influenced by international economic and political changes that have altered the course of their policy actions. In the Plaza and Louvre Accord era in the late 1980s, establishing the strong G2 (Japan and the US) cooperation was a key element in the Japan’s financial diplomacy. Japan attempted to use the G2 special relationship as the base of its increased influence in the international financial regime within the framework of the G7. After the G2 alliance was badly weakened by the growing tensions over trade issues under the Clinton administration, it was strengthened again under the Bush administration partly in response to the need to fight against the terrorism after the 9.11 and the emergence of China as an economic power. Notably in the foreign exchange policy, the US and Japan have called on China to increase flexibility of the Chinese currency. In the globalising financial regime, China has been increasingly placing their currency policy in the context of how they could make the most use of their influence when they liberalise their currency markets. The China’s approach to the UK with an indication of their wish to use London as a hub for the Chinese currency’s businesses as an international currency seems to have a certain influence on the UK’s application of its membership to the AIIB (Asian Infrastructure Investment Bank). While the regional framework of financial cooperation could be supplementary to the global framework, the forces of globalisation of financial markets are becoming greater and expected to continue to do. Japanese financial diplomacy is expected to be determined more by what role the Japanese Yen will play in the international financial markets in relation to the Chinese Renminbi than by merely how these two currencies would compete in the Asian financial markets.
Financial Diplomacy, Japan, globalisation of international financial markets
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