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The euro has been remarkably
stable during its 15-year existence as a major currency. That has not always
been a good thing for the European economy. But the real concerns for the
single currency hinge on politics and survival.
Last summer, commentators began predicting that U.S. monetary policy would no longer aim to avoid deflation and boost growth, but to keep market interest rates close to what economists call the 'natural' rate. The reasoning behind this argument – publicly voiced by Fed Vice Chairman Stanley Fischer, among others – is puzzling. That may be deliberate, as the Fed has plenty of reasons to want a free hand in coming months.
Professor Enrico Colombatto
Egypt incurred the wrath of its citizens in November by floating the pound. But as long as the country has weak institutions and a weak economy, it must have a weak currency, too.
President Donald Trump’s incoming administration is about to give the United States Federal Reserve just what it’s been asking for – a significant fiscal stimulus. The problem is what happens next, when inflation expectations, interest rates and the dollar all go up. Tempers will flare in Washington, and the international repercussions could be much worse.
The policies that have kept Russia's economy afloat over the past two years merit close study by other commodity exporters.
At the end of November, the International Monetary Fund (IMF) announced that from October 2016 the Chinese yuan will be part of the basket of currencies that defines the Special Drawing Right (SDR), the accounting unit the organisation uses to carry out financial operations. The immediate practical effects will be minor. Being part of a unit of account means all bu...
The performance of the economies of China, the United States and Europe, and their interaction over the coming months will define global scenarios for years to come. Prospects for both China and the US look brighter with faster growth as central bankers seem to have learned lessons. The European outlook, however, remains gloomy in the short and medium term.