Back to School Blogs


By iMFdirect

It’s been a busy summer, and you might not have had a chance to read everything as it came across your screen.  So as your holidays wind down and you head to work, the editors at iMFdirect have put together some key blogs on hot topics to help you get back up to speed by September.

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Currency & Power


by iMFdirect

We have a global economy, but we don’t have a global currency. Or do we?

In this podcast interview with Benjamin Cohen, professor of International Political Economy at the University of California, Cohen explains why currencies become internationalized, and examines the relationship between world currencies and State power.

Power is influence, and it is also the ability to do what you want without having to worry about what others want, according to Cohen.

The United States dollar has been a dominant currency because the U.S. economy has dominated since World War II. What makes the dollar attractive, according to Cohen, is the U.S. financial market. The dollar offers liquidity advantages that no other does.

Cohen describes what he calls a currency pyramid, which  includes the U.S. dollar at the very peak.  It has universal scope and domain. Potentially the renminbi, China’s currency (also known as the yuan), which is still just a minnow, according to Cohen, but it’s international use is growing quite rapidly. It reflects that China has achieved a degree of autonomy that’s almost unprecedented.

Some people would like one world currency, which would come with a great deal of power. Cohen does not believe a world currency is possible in today’s world.

The best we can hope for is for institutions like the IMF to help governments to manage their currencies more efficiently.

According to Cohen, as long as we have a political system that relies on state sovereignty, we’re going to live with an imperfect monetary system, and the best we can hope for is international institutions that can help smooth some of the rough edges.

To listen to the podcast, you can tune in here:

 

The Overwhelming Case for a Carbon Tax in China


By Ian Parry and Philippe Wingender

Version in 中文 (Chinese)

A single policy could do it all for China. A carbon tax—an upstream tax on the carbon content of fossil fuel supply—could dramatically cut greenhouse gases, save millions of lives, soothe the government’s fiscal anxieties, and boost green growth. Continue reading

The Lowdown on U.S. Core Inflation


Yasser AbdihBy Yasser Abdih

There was a time when U.S. central bankers worried that inflation was too high, and they tried to bring it down. Now the opposite is true: the Federal Reserve is concerned that inflation has remained stubbornly low, and it’s trying to boost prices. The reason: persistently low inflation raises the risk that prices will actually start to decline, a dangerous condition known as deflation. That’s bad news because it makes people less willing to borrow and spend—anticipating lower prices, consumers will put off spending—and could also lead to a fall in wages. Continue reading

G-20: Five Ways to Spark Growth


By iMFdirect

Once again, we face the prospect of weak and fragile global growth. Released earlier this week, the IMF’s update to the global economic outlook expects global growth at 3.1 percent and 3.4 percent in 2016 and 2017, respectively, slightly down from April estimates. The global outlook, which was set for a small upward revision prior to the U.K.’s referendum, has been revised downward, reflecting the increased economic, political, and institutional uncertainty. Continue reading

A Spanner in the Works: An Update to the World Economic Outlook


21970901656_57e69fe1e3_zBy Maurice Obstfeld

Versions in عربي (Arabic), 中文 (Chinese), Français (French), and Español (Spanish)

The United Kingdom’s June 23 vote to leave the European Union adds downward pressure to the world economy at a time when growth has been slow amid an array of remaining downside risks. The first half of 2016 revealed some promising signs—for example, stronger than expected growth in the euro area and Japan, as well as a partial recovery in commodity prices that helped several emerging and developing economies. As of June 22, we were therefore prepared to upgrade our 2016-17 global growth projections slightly. But Brexit has thrown a spanner in the works.

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The People’s Bank of China: Monetary Policy in a Time of Transition


by iMFdirect

Today at the IMF, the Governor of the People’s Bank of China, Zhou Xiaochuan, gave the Michel Camdessus Central Banking Lecture in Washington, D.C.

With China’s economy undergoing a transition, Governor Zhou spoke about managing monetary policy with multiple objectives, and the independence of central banks.

“For central banks with a single objective, it is relatively easy to be independent. However, if a central bank has multiple objectives, it may be harder to be immune from the political reality.”

Zhou also discussed the role of central banks in economies undergoing a transition to a market economy.

“If central banks do not promote financial reforms or development of financial markets, there would be no healthy financial institutions or market mechanisms, let alone smooth transmission of monetary policy. Furthermore, like other emerging market economies, transition economies have a low level of development and hoped to make up for the ‘lost decades’.”

You can watch Governor Zhou’s speech and his discussion with IMF Managing Director Christine Lagarde.

PBOC pic

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