Since the financial crisis in the late 1990s, Asian governments have been considering strengthening regional monetary and financial co-operation. Proposals have ranged from the Asian Monetary Fund to common currencies. China, Japan, Korea and the member states of ASEAN have established a set of financial facilities under an agreement made in Chiang Mai, Thailand. The Chiang Mai Initiative (CMI) mobilizes a portion of the very large reserve holdings of its members for financial stabilization in a crisis. This study examines the case for and against regional financial arrangements in East Asia. It describes the CMI, compares it with financial agreements in other regions, and recommends how the initiative can preserve its complementarity to multilateral institutions and be strengthened in the future.