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Tag Archives: international currency

Is a dollar crash coming?

Even if a sovereign debt crisis is avoided, the public debt burden will negatively impact growth. The dominant role of the U.S. dollar can be traced back to the end of World War II or even earlier to the interwar period when it gradually dethroned the British pound. Since the collapse of the Bretton Woods system in 1971 (in fact, this was a crisis of the U.S. currency), there has been continuous speculation about the imminent fall of the dollar in its global role. However, this has not...

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The geopolitics of money

The current debate on currencies is driven by politics rather than economics. In this episode of the Sound of Economics, Paola Subacchi, Professor of international economics and chair of the advisory board of the Global Policy Institute at Queen Mary University of London, and Bruegel senior scholars Alicia García-Herrero and Michael Leigh join Giuseppe Porcaro for an age old discussion but with a twist. They try to understand the geopolitical role of money, in other words, currencies and...

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Politics, not economics, demands a strengthened international role for the euro

Not just the EU but also other countries, particularly China, need a defence against weaponisation of the dollar. Since the launch of the euro, much attention has been focused on the international role it might play. Seen from the outside, a single European currency should have become a rival to the dollar. From the inside, though, the notion of the euro becoming a major reserve currency was not a stated European objective. Market forces would be left to decide its fate. Two decades on,...

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Too crowded bets on “7” for USDCNY could be dangerous

The Chinese yuan has been under pressure in recent days due to the slowing economy and, more importantly, the escalating trade war with the US. While the Peoples Bank of China has never said it will safeguard the dollar-yuan exchange rate against any particular level, many analysts have treated '7' as a magic number and heated debates have begun over whether the number is unbreakable. Chinese yuan has been under pressure in recent weeks due to the double dip in recent economic data and...

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The ‘seven’ ceiling: China’s yuan in trade talks

Investors and the public have been looking at the renminbi with caution after the Trump administration threatened to increase duties on countries that intervene in the markets to devalue/undervalue their currency relative to the dollar. The fear is that China could weaponise its currency following the further increase in tariffs imposed by the United States in early May. What is the likelihood of this happening and what would be the consequences for the existing tensions with the United...

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The euro as an international currency

Is a more important international role for the euro worth pursuing? What measures would achieve this result, if it is worth pursuing? Two questions should be answered in relation to the international role of the euro: is a more important international role for the euro worth pursuing, and what measures would achieve this result, if it is worth pursuing? The most significant benefit for the euro area if the euro played an increased international role would be less dependence on the...

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The international role of the euro

The authors assess whether the euro area should pursue a greater international role for the euro, as outlined by European Commission president Jean-Claude Juncker, and how it might go about doing so. European Commission president Jean-Claude Juncker raised, in his latest State of the Union address on September 12th, an issue that has been somewhat dormant over recent years: the international role of the euro. Indeed, he announced that the Commission would present plans “to strengthen...

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Can Eurozone Reform Help Contain Trump?

The Trump administration knows that a key source of US economic leverage is the dollar’s role as the world’s dominant reserve currency. Countering America’s disproportionate power to destabilize the global economy thus requires reducing the share of international trade conducted in dollars. This opinion piece has been published in  BRUSSELS – US President Donald Trump is using economic warfare to pursue his foreign-policy objectives. In August, his administration announced that it...

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The international use of the euro: What can we learn from past examples of currency internationalisation?

The recent State of the Union speech by Jean-Claude Juncker sparked a discussion about the potential wider use of the euro on the international stage. Historically, it is not the first debate of this kind. Emmanuel Mourlon-Druol analyses four previous cases of debates on international currencies to reveal the different scenarios associated with their greater use, as well as the need to have a clear objective for a currency’s internationalisation. By: Emmanuel Mourlon-Druol Date:...

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