 |
 |
 |
 |
 |
 |
 |
In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
The International Monetary Fund (IMF) released the latest update of its data on the Currency Composition of Official Foreign Exchange Reserves (COFER) at the end of March, with data through the end of 2012. From the end of 2010 through the end of 2012, the quantity share (adjusted for the effects of changes in exchange [...]
On January 19, the Wall Street Journal published a letter that was a condensed version of my response to an article by Edward Lazear on January 8. My complete response follows. Edward Lazear argues that China’s massive government intervention in the currency markets—more than $3 trillion in the past 10 years—has caused no significant harm [...]
Note: The author thanks Jared Nolan for research assistance. In a recent policy brief, my colleague Joseph Gagnon (2012) argued that widespread currency manipulation by many countries in recent years has led to a reduction in the US current account balance by about 4 percent of GDP (about $600 billion annually). Subsequently C. Fred Bergsten [...]
In my policy brief, “Combating Widespread Currency Manipulation,” I list 20 countries that meet stringent criteria for excess accumulation of foreign exchange reserves designed to hold down the values of their currencies. The list includes various statistics expressed as a percent of each country’s GDP. In response to questions, I provide here a ranking of [...]
Internal devaluation has become a big issue in the euro area but it remains controversial. In the latest International Monetary Fund (IMF) letter of intent for Greece, box 3 on “Internal Experience with Internal Devaluation” (pp. 48–49) opposing internal devaluation has been incorporated. It summarizes the standard arguments, but the point of this comment is [...]
Newspapers are full of stories and learned commentaries about the decline in the US dollar as the premier international reserve currency. These reports, to the extent that they are based on any facts, tell only a small part of the story of the evolution of international reserve holdings in recent years. The real news is [...]
Note: This post is based on an author’s intervention at the International Conference of RCIE, KIET, and APEA on China and the World Economy, Seattle, March 16, 2012. The progress of China towards financial integration and the internationalization of renminbi is a matter of great importance. While the world economy remains financially unstable, accessing the [...]
Federal Reserve Chairman Ben Bernanke recently said that Chinese currency manipulation “is blocking what might be a more normal recovery process.” In fact, the problem goes beyond China to include many other emerging economies and even a few advanced economies. Altogether, governments in these economies are spending about $1.5 trillion per year on currency manipulation. [...]
The excessively gloomy headlines about the imminent demise of the euro currency have at least temporarily receded as European Union (EU) politicians and central bankers play out their sequenced games of political quid pro quo. Progress is being made. Prime Minister Mario Monti has presented a new fiscal package for Italy, which will likely be [...]
It is currently costing the Chinese central bank about $240 billion per year to hold down the value of the Chinese currency relative to other currencies. This cost is growing rapidly. The cost would decrease significantly if China allowed its currency to float and began reducing its foreign reserves, although there would likely be a [...]