Eswar Prasad, Saturday, March 29, 2014

Eswar Prasad talks to Viv Davies about his recent book, ‘The Dollar Trap: How the US dollar tightened its grip on global finance’, which examines how, paradoxically, in light of the financial crisis, the dollar continues to play a central role in the world economy and why it will remain the cornerstone of global finance for the foreseeable future. They also discuss the current frameworks for international economic cooperation as well as currency wars, unconventional monetary policy and the prospects for the renminbi becoming the world's reserve currency. The interview was recorded in London in March 2014.

Espen Henriksen, Finn Kydland, Roman Šustek, Wednesday, October 2, 2013

The monetary policy for Eurozone members is one-size-fits-all in an economic area rife with economic differences. Does this really make a difference? This column argues that even if each EZ member state had a fully independent monetary authority, monetary policies would likely still appear highly synchronised across EZ members.

Michael W Klein, Jay C. Shambaugh , Friday, September 27, 2013

The ‘financial trilemma’ – that open capital markets and pegged exchange rates mean a loss of monetary autonomy – has recently been challenged. Some argue that even flexible exchange rates cannot assure monetary autonomy without capital controls, while others argue even countries with fixed exchange rates can gain autonomy through temporary capital controls. This column argues that free floating exchange rates do in fact allow autonomy, and partially floating ones allow partial autonomy. For countries with fixed exchange rates, capital controls provide monetary autonomy when they are widely applied and longstanding, but not when they are temporary and narrowly targeted.

Paul Bergin, Reuven Glick, Jyh-lin Wu, Thursday, October 4, 2012

For many observers, one central flaw of the Eurozone is that countries lose the ability to manipulate their exchange rates to suit their needs. But this article argues that flexible exchange rates are often more likely to make things worse than make things better.

Zsolt Darvas, Wednesday, September 5, 2012

The need to rebalance the debts of several Eurozone members is a major root of the current crisis. This column argues that a purely intra-euro rebalancing strategy has its limits and that a weaker euro would help. It urges the European Central Bank to adopt looser monetary policy, which is anyway justified in a highly recessionary environment.

DeLisle Worrell, Saturday, June 23, 2012

If Greece leaves the euro, it can devalue its currency and start an export-led recovery – or so the popular argument goes. This column provides some hands-on insights from another small open economy, Barbados. It argues that for these economies that rely heavily on imports, devaluation will never be a viable option.

Michael Bordo, Owen F Humpage, Anna J Schwartz, Monday, June 18, 2012

The so-called trilemma of international finance maintains that a country cannot simultaneously peg an exchange rate, maintain an independent monetary policy, and permit free cross-border financial flows. At best, only two of the three are feasible. This column argues that despite their best efforts, countries are set to learn this lesson again and again.

Jonathan D Ostry, Atish R Ghosh, Marcos Chamon, Sunday, May 27, 2012

Before the global crisis, central banks could reply ‘inflation targeting’ to virtually any question about their policymaking and the ‘Great Moderation’ seemed to back them up. The crisis has put a stop to this smugness. Central banks are now engaged in emergency evasive manoeuvres and are scrambling for new intellectual anchors. This column argues that emerging market central banks should target price stability while being mindful of disequilibrium exchange rate movements.

Takatoshi Ito, Junko Shimizu, Tuesday, March 20, 2012

Last year, the yen reached a post-war high against the dollar and a record high against the euro. This column looks at the recent trend in the Japanese currency and outlines what Japan’s policymakers should do about it.

Eswar Prasad, Lei (Sandy) Ye, Thursday, February 16, 2012

Is China’s currency destined to become the dominant global reserve currency? This column argues that despite not yet having a flexible exchange rate or open capital account, China’s government is pursuing ‘liberalisation with Chinese characteristics’. It argues that the renminbi will become a reserve currency within the next decade, eroding but not displacing the dollar’s dominance.

Atish R Ghosh, Jonathan D Ostry, Charalambos Tsangarides, Monday, February 6, 2012

Over the past three decades, emerging market economies have been rapidly accumulating reserves – a trend that has resumed, and even accelerated, following the 2008 global financial crisis. This column examines factors driving this accumulation and how these factors have evolved over time and differed across countries.

Charles A.E. Goodhart, Thursday, February 2, 2012

Inflation in the UK is now more than double that of France, but only one country has had its credit rating downgraded. This column argues that government credit ratings should be aided by a second rating measuring the potential loss of real value, whether by inflation or default.

Willem Thorbecke, Sunday, January 29, 2012

Understanding China’s economy is becoming as difficult as it is important. This is particularly the case for China’s exports and its exchange rate, which have been the source of controversy and intense debate in recent years. Shedding light on the issue, this column disaggregates China’s processing trade, with some surprising implications for policy in the region and elsewhere.

Carlo Altomonte, Filippo di Mauro, Gianmarco I.P. Ottaviano, Vincent Vicard, Armando Rungi, Wednesday, January 4, 2012

Trade in today’s global economy is not a simple game of exchange-rate muddling. The complex web of global value chains ensures that products marked “Made in China” are often in fact made all over the world. This column looks at firm-level data from French firms between 2007 and 2009 and explores how their structure affects their behaviour, with insights for policymakers the world over.

Marcel Fratzscher, Arnaud Mehl, Thursday, December 15, 2011

Is the international monetary system tripolar – with the US dollar, the euro, and the Chinese renminbi at each corner? This column presents empirical evidence to suggest that the renminbi is already well on its way to being the dominant currency in Asia.

Helmut Reisen, Monday, December 5, 2011

China’s currency has appreciated substantially in recent years. While many in the west still argue that this is not sufficient and focus on the effects on their domestic industry, this column asks what the effects have been for the world’s poor countries.

Rajeswari Sengupta, Joshua Aizenman, Tuesday, November 15, 2011

Emerging markets face what some economists are calling a trilemma. They cannot simultaneously target exchange-rate stability, conduct an independent monetary policy, and have full financial integration. So what to do? This column looks at how Asia’s giants are responding – and in different ways.

Marc Auboin, Michele Ruta, Sunday, November 13, 2011

Real exchange rates are a headache for policymakers. Sometimes they move around too much, disrupting trade and harming business, sometimes they don’t move enough, leaving economies with fewer options for growth. This column reviews the literature on the effects of exchange-rate volatility and how to deal with them.

Yothin Jinjarak, Joshua Aizenman, Friday, September 30, 2011

In the immediate fallout from the global crisis, governments around the world responded by spending big. Yet despite the talk of international coordination, this wasn’t the case in all countries. This column explores why. It finds that trade openness, fiscal space, and exchange-rate policy played a pivotal role.

Uri Dadush, Vera Eidelman, Friday, September 23, 2011

Currency wars are a pressing concern in the international arena. This column introduces a new online book that argues the real cause of today’s currency tensions are misguided domestic policies in the world’s major economies. The cure is not to overhaul the exchange-rate system – which has worked well during a global crisis. The solution lies in incremental change by the US, the EU, and China.

Pages

Events