East Asian Capital Markets Integration - Steps Beyond ABMI

July 2007 will mark the 10th Anniversary of the Asian Financial Crisis. Following the Crisis, the ASEAN Finance Ministers’ Meeting in Manila in April 1999 decided to work towards strengthening ASEAN cooperation and also aims at wider (ASEAN+3) cooperation. Since then, many measures, such as the Asian Bond Market Initiative (ABMI) and Chiangmai swap arrangements have been launched to considerable fanfare. There was common recognition that Asian economies need to cooperate more, build deep and liquid capital markets, improve surveillance, and strengthen risk management and supervision in order to avoid future financial crises. In an earlier paper, it was suggested that despite considerable goodwill and intentions by the different Asian authorities, it has proved difficult to integrate Asian Bond Markets due to bureaucratic differences within countries and between countries. This paper tries to take the analysis further by using Network Theory and Douglass North’s new institutional framework to understand Asian capital markets can work together, through the “process” of searching for common values, common beliefs, common products and shared infrastructure.