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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.
By all accounts, EU member countries have for months been debating how to implement the minimum bank capital standards agreed under Basel III. Their arguments have unfolded as the EU works to complete its fourth Capital Requirements Directive (CRD4) and its Capital Requirements Regulation (CRR); (see Véron 2012). Three issues have been contentious: (i) whether [...]
Throughout modern economic history, every major financial crisis has been followed by premature abandonment—if not reversal—of the very stimulus policies necessary for sustained recovery. If the world is not to repeat that mistake, the Federal Reserve and the European Central Bank (ECB) must engage in further monetary stimulus, which today means purchasing additional government securities [...]
The economist Thomas Schelling began his 2005 Nobel Prize lecture with a famous declaration. “The most spectacular event of the past half century is one that did not occur,” he said. “We have enjoyed 60 years without nuclear weapons exploded in anger [pdf].” In the same way, the imminent collapse of the euro area will [...]
Despite the budget deal to keep the government running for the rest of the fiscal year, the United States remains at a profound impasse over its long-term public finances, with fiscal deficits lingering around 10 percent of the gross domestic product. Early in the financial crisis, presidential chief of staff Rahm Emanuel made the much-quoted [...]
The US Federal Reserve is preparing what could turn out to be one of its greatest follies since its defense of the gold standard during the Great Depression. Ben Bernanke, the Fed chairman, has signaled that next month the central bank could begin the process of printing hundreds of billions of dollars to buy US [...]
Why has China moved to raise interest rates? And is there any connection between its monetary policy actions, which surprised global markets, and whether China is willing to let its currency appreciate? Was this an either/or choice? The answers to these questions are not simple, but first one needs to look at the record of [...]
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 [...]
In his testimony [pdf] to the Congress this week, Fed Chairman Ben Bernanke left the door open to further monetary stimulus but made it clear that such action is not imminent. This reluctance to act may seem puzzling given the widespread view that the economic recovery is too weak. In response to a senator’s question, [...]
I am not able these days to make as much time as I would like to read whole books, but during a recent vacation I was able to finish Lords of Finance by Liaquat Ahamed. I recommend it to anyone interested in the interwar period of the 1920s and 1930s, both before and after, and [...]
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 [...]