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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.
Despite the numerous predictions of its demise, the euro is alive and well at the end of 2012. Indeed, it has again held its value against other currencies during the year,1 confounding skeptics just as it did a year ago. As 2012 comes to a close and the last European Union Council of the year [...]
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 [...]
European crisis management usually consists of avoiding the worst outcome. Yet in five decades the continent has established the most successful example of a politically and economically integrated region in the world. Now, as it becomes clear to European policymakers that avoiding the worst outcome for the euro (e.g., a break up of the euro [...]
On June 30, the International Monetary Fund (IMF) will release an update of its Currency Composition of Official Foreign Exchange Reserves (COFER) database. The most recent release on March 31 indicated that over the eight quarters to the end of 2010, the dollar’s quantity share of all countries’ foreign exchange reserves had decreased by a [...]
The European Union Council, meeting in the first week of February, did not produce the “comprehensive long-term solution” to the eurozone’s debt crisis that some had hoped. Yet, EU leaders did agree on a deadline to produce their version of such a solution at the next Council in late March 20111, and they offered the [...]
The recent turn toward fiscal austerity in Europe in the wake of the Greek crisis has raised serious concerns that it will threaten economic growth and revive global trade imbalances. While fiscal consolidation is unavoidable for the high-deficit, high-debt countries, the cuts made by Germany, whose government deficit is comparatively moderate, have attracted particular criticism. [...]
There has been little love by financial markets for European leaders these days. But one has to wonder about the level of disdain reflected in recent surveys of City of London economists1 and global investors showing agreement about the likelihood of a breakup of the eurozone. How can a majority of 25 City of London [...]
The argument is widely heard in Europe and elsewhere: If only Greece and other struggling eurozone countries could let their currency depreciate, as other collapsing economies have done when hit by debt crises—in Asia and Latin America, for example. Such a step would in theory boost demand for these countries’ exports, limit their imports, and [...]
Europeans may find several historical and theoretical reasons why a political government for the euro area would be desirable. But after the global crisis there are technical reasons why it is more than desirable. That conclusion is a necessity in light of three increasingly important aspects of current monetary developments in Europe: (1) the lack [...]
The dollar is depreciating in eye-catching and headline-grabbing fashion. The Japanese authorities are signaling that they are prepared to intervene. The G-7 (remember them?) has the established role of coordinated intervention in major currency markets when things get out of hand. So where are they now and when will they come in?