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Policy Contribution

The threat of ‘currency wars’: a European perspective

This Policy Contribution was prepared as a briefing paper for the European Parliament Economic and Monetary Affairs Committee’s Monetary Dialogue, entitled The threat of currency wars: global imbalances and their effect on currencies, held on 30 November 2010. Bruegel Fellows Jean Pisani-Ferry and Zsolt Darvas argue the so-called currency war is manifested in three ways: […]

By: and Date: December 13, 2010 Topic: Global economy and trade

This Policy Contribution was prepared as a briefing paper for the European Parliament Economic and Monetary Affairs Committee’s Monetary Dialogue, entitled The threat of currency wars: global imbalances and their effect on currencies, held on 30 November 2010. Bruegel Fellows Jean Pisani-Ferry and Zsolt Darvas argue the so-called currency war is manifested in three ways: 1) the inflexible pegs of undervalued currencies; 2) attempts by floating exchange-rate countries to resist currency appreciation; 3) quantitative easing.

Europe should primarily be concerned about the first issue, which relates to the renewed debate about the international monetary system. The attempts of floating exchange-rate countries to resist currency appreciation are generally justified while China retains a peg. Quantitative easing cannot be deemed a "beggar-thy-neighbour" policy as long as the Fed’s policy is geared towards price stability. Central banks should come to an agreement about the definition of price stability at a time of deflationary pressures, as current US inflationary expectations are at historically low levels. Finally, the exchange rate of the Euro has not been greatly impacted by the recent currency war; the euro continues to be overvalued, but less than before.

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By: Alicia García-Herrero Topic: Green economy Date: January 26, 2022
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By: Simone Tagliapietra Topic: European governance, Global economy and trade Date: December 7, 2021
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External Publication

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By: The Sound of Economics Topic: Global economy and trade Date: November 10, 2021
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China’s emissions trading scheme is a welcome but to reach its full potential, it needs to cover more of China’s emissions, go beyond the electricity sector and let prices reflect the true cost of carbon.

By: Alicia García-Herrero and Junyu Tan Topic: Global economy and trade, Green economy Date: October 22, 2021
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Why is China reviving this old mantra?

By: The Sound of Economics Topic: Global economy and trade Date: October 13, 2021
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Opinion

Xi’s pledge on financing coal plants overseas misses point

China’s domestic installation of coal-fired power plants continues at great pace.

By: Alicia García-Herrero and Simone Tagliapietra Topic: Global economy and trade, Green economy Date: October 7, 2021
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