Contents Foreword Regional Financial Cooperation: Experiences and Challenges, José Antonio Ocampo Reforming the Global Financial Architecture: The Potential of Regional Institutions, Roy Culpeper Regional Development Banks: A Comparative Perspective, Francisco Sagasti and Fernando Prada Regional Exchange Rate Arrangements: The European Experience, Charles Wyplosz European Financial Institutions: A Useful Inspiration for Developing Countries? Stephany Griffith-Jones, Alfred Steinherr, and Ana Tereza Fuzzo de Lima Macroeconomic Coordination in Latin America: Does It Have a Future? José Luis Machinea and Guillermo Rozenwurcel Subregional Financial Cooperation: The Experiences of Latin America and the Caribbean, Daniel Titelman Regional Financial Integration in East Asia: Challenges and Prospects, Yung Chul Park Asian Bond Market Development: Rationale and Strategies, Yung Chul Park, Jae Ha Park, Julia Leung, and Kanit Sangsubhan The Arab Experience, Georges Corm An Analysis of Financial and Monetary Cooperation in Africa, Ernest Aryeetey Foreword The Monterrey Consensus, adopted by the 2002 International Conference on Financing for Development, highlighted in its paragraph 45 "the vital role that multilateral and regional development banks continue to play in serving the development needs of developing countries and countries with economies in transition." It went on to note, "They should contribute to providing an adequate supply of finance to countries that are challenged by poverty, follow sound economic policies and may lack adequate access to capital markets. They should also mitigate the impact of excessive volatility of financial markets. Strengthened regional development banks and subregional financial institutions add flexible financial support to national and regional development efforts, enhancing ownership and overall efficiency. They also serve as a vital source of knowledge and expertise on economic growth and development for their developing member countries." Despite this call, however, relatively little progress has been made since Monterrey in enhancing the role that regional financial arrangements play in the international financial system. The failure to devote attention to this issue is attested to by the absence of any book or report providing a comparative evaluation of the experience with regional financial cooperation in different parts of the world. This book seeks to fill this serious gap in the existing literature. Experiences in this area can be clustered into two groups: development financing; and mechanisms for macroeconomic cooperation and related financial arrangements (liquidity financing during balance-of-payments crises);. Although our central aim is to explore the ways in which regional cooperation can promote the interests of developing countries, we will use Western Europe's experiences with regional financial cooperation as a benchmark for that exploration. The experiences reviewed in this book indicate that regional cooperation can be a very effective means of surmounting the difficulties posed by the shortfall in the financial services provided by the current international financial architecture. Nonetheless, the scope of these institutions' operations is still limited and they have yet to be recognized as central elements in the international financial architecture. We hope that this book will spark a broader interest in initiatives in this area and indeed bring them to the center of the current discussion on South-South cooperation. We are deeply grateful to the Ford Foundation for providing the United Nations Economic Commission for Latin America and the Caribbean with the support it needed to undertake this project. José Luis Machinea Executive Secretary Economic Commission for Latin America and the Caribbean José Antonio Ocampo Under-Secretary-General for Economic and Social Affairs of the United Nations