In The News

The World Economy Has No Easy Way Out Of the Mire

Martin Wolf February 24, 2010
Central banks around the world helped to avert disaster through significant monetary stimulus in the aftermath of the financial meltdown. This stimulus has also aided the rebound in financial markets since the lows of March 2009. But, Martin Wolf rightly asks, what will happen once that stimulus is removed? Or, in other words, will the exit strategy be successful? For Wolf, success would be a...

Falling Dollar Pushes Manufacturing Out of Europe

Dinah Deckstein, Frank Dohmen, Dietmar Hawranek, Alexander Jung December 10, 2009
With the secular decline in the US dollar, some manufacturers like Mercedes-Benz that face rising costs and lower competitiveness are moving some production from Germany to the US. Normally, such companies hedge their exchange rate exposure through derivative contracts to protect them against rapid depreciation of foreign currencies. But such contracts become more expensive amid a sustained...

The Bonds Of Debt

Nayan Chanda November 24, 2009
President Obama’s first visit to China has understandably drawn wide attention. Observers have scrutinized the visit – from the symbolic town hall meeting to the unprecedentedly detailed Joint Statement – trying to gauge the extent of cooperation between the two countries. On the face of it, China clearly enjoys some advantage over the US. It is the largest foreign creditor to the US and is...

Obama in Asia – Part III

Shen Dingli November 20, 2009
US President Obama’s recent trip to China reveals the ways in which US-China relations might be changing. According to Shen Dingli, Director of the Center for American Studies at Fudan University Shanghai, the tenor of the trip showed that China’s status has risen as the US appears to be accepting China’s terms of the relationship. Obama’s exposure to the Chinese people was also limited as his...

Death Cometh for the Greenback

Joseph E. Stiglitz November 19, 2009
Joseph Stiglitz, a leading global economist, argues that the US dollar has a limited future as the world’s dominant currency. But such a change to a system that has long relied on the US dollar as the global reserve currency is not to be feared: it will benefit both the US and the world. The current system is unstable, weakens the global economy, and works to the disadvantage of all countries....

Down But Not Out

Krishna Guha October 21, 2009
With the US caught in a deep recession and mired in deepening debt, the status of the US dollar as the world’s reserve currency is in question. Should these questions appear warranted, a crisis of confidence could create a “self-propelling spiral” weakening the dollar further. And if the dollar were to plummet, intervention by not only the US, but also other economies could be the response. But...

The Demise of the Dollar

Robert Fisk October 6, 2009
Veteran Middle East correspondent Robert Fisk reports that “secret meetings” between Russia, China, Japan, Brazil and some Arab States have occurred to discuss the possibility of pricing a barrel of oil in a basket of currencies rather than US dollars. Some believe such a development, if true, might ignite a new economic war between the US and China, which consumes more oil than the US on the...