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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.
What seems like an arcane squabble over relative growth rates between Iceland and Latvia has erupted into an argument between two heavyweight voices on economic policy—the Council on Foreign Relations (CFR) and Paul Krugman. Obscure though it may be, their disagreement is important. It is actually a proxy for a much bigger debate on whether [...]
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 [...]
The recent drama over whether the United States would default has weakened confidence in the American economy and underscored the already growing desire of many investors around the world, including many central bankers, for more diversity in their portfolios. Indeed, even policymakers in the United States might agree that the US dollar is vastly over-weighted, [...]
As chair of the Group of 20 leading economies this year, France has placed the reform of the international monetary system (IMS) high on the Group’s agenda. Discussion is at a very preliminary stage, but member countries are trying to negotiate a strategy to address the compelling problem of global imbalances. To that end, the [...]
President Sarkozy of France, current head of the G-20, has slipped comfortably into France’s traditional role of calling for fundamental reform of the international monetary system (IMS). On February 19, the G-20 finance ministers and central bank governors met in Paris and dutifully laid out a work program “aimed at strengthening the functioning of the [...]
The rise of emerging economies has long been recognized as a defining feature of our times when it comes to trade, manufacturing, and an increasing range of services businesses. Until recently, however, there was widespread sentiment that international finance was somehow escaping the trend. A dominant share of financial assets, financial companies, financial centers, and [...]
Before the global economic and financial crisis began in August 2007, the enormous current account deficits and surpluses of some major countries and groups of countries (the United States, China, and oil producers, for example) were widely identified as posing the greatest risk to international economic and financial stability. As the crisis winds down, attention [...]
Pundits and policymakers around the world are wringing their hands over the possibility of further declines in the foreign exchange value of the dollar. Predicting exchange rates is notoriously difficult; there is almost as much chance of the dollar rising next year as of it declining. But if the dollar were to fall further, should [...]
Over the past six months, officials and commentators have raised questions about the reserve currency role of the US dollar and the structure of the international monetary system. None of their questions is new; they all date back at least to the break-up of the Bretton Woods system of fixed exchange rates in the early [...]