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September 8, 2011 | Full Integration Is Europe's Only Option

With more European countries falling into financial turmoil, it is time the EU took significant steps towards greater political and economic integration. ++ The current European crisis shows that a monetary union cannot function without a common fiscal and coordinated economic policy. ++ Strengthening European federalism is the only way to guarantee long-term stability for the EU and its common

April 2, 2010 | Is China the Great Currency Manipulator?

China will likely be labeled a “currency manipulator” in the upcoming US Treasury report on foreign currency arrangements. ++ This label could carry a greater diplomatic than economic cost, potentially leading to a trade war. ++ Congress is putting pressure on the Treasury to adopt the label after China’s 2008 decision to re-peg to the dollar. ++ The administration believes in

December 22, 2009 | Nobody Said it Would be Easy

China’s undervalued currency and huge trade surplus threaten the world economy and risk engendering backlash from Europe and the US. ++ The situation is not as simple as many pundits would have us believe. ++ Undervaluation is the government’s main instrument to subsidize industrial growth, since its traditional options were taken off the table by the WTO. ++ China can either risk global

October 7, 2008 | Creating an Asian Bond

It is time for the “globar” - or “global dollar,” a collective Asian bond that could revitalize the world economy by catering to US currency-stabilization needs and simultaneously recycling massive Asian surpluses back into tangible assets in Asia itself. ++ Asia’s surpluses are primarily in US dollars, a risky investment in the current turmoil. ++ Asian countries are no longer mere borrowers,

September 16, 2008 | The Euro, Still Going Strong

The Euro is not yet ten years old, but its success to date has been unquestionable. ++ Despite numerous exogenous shocks - ranging from the specter of terrorism to the subprime mortgage meltdown in the US - the Euro is still going strong. ++ Without a single currency, member states of the European Monetary Union would likely be experiencing the capital exploitation and speculation seen in the

May 31, 2007 | Bruegel Says Worldwide Exchange Rates Adjustment Would Fight Current Account Deficits

The March 2007 Bruegel Policy Brief reveals that imbalances in global current account positions are not sustainable and need adjustment. A 15% depreciation of the dollar and an appreciation of Asian currencies is needed in order to:

• reduce the US current account deficit,
• faciliate China’s focus on domestic demand and reduce its accumulation of foreign exchange reserves, and
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April 12, 2007 | Kenneth Rogoff Asks What Keeps the Dollar so Strong

The dollar should be much weaker relative to America’s competitive position, according to Kenneth Rogoff of Harvard University. In 2006, interest payments for US debt amounted to 6.5% of GNP. US borrowing makes up more than two-thirds of combined excess savings of all surplus countries in the world. The former IMF chief economist reports that domestic consumption, Americans’ confidence in their