The threat of 'currency wars': A European perspective

Arbeitspapier

The 'currency war', as it has become known, has three aspects: 1) the inflexible pegs of undervalued currencies; 2) recent 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. Current US inflationary expectations are at historically low levels. Central banks should come to an agreement about the definition of price stability at a time of deflationary pressures. The euro's exchange rate has not been greatly impacted by the recent currency war; the euro continues to be overvalued, but less than before.

Object Details

• ISBN: 978-615-5024-32-0
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IEHAS Discussion Papers ; No. MT-DP - 2011/2

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy ; Central Banks and Their Policies ; Foreign Exchange ; International Monetary Arrangements and Institutions
• Subject: currency war ; quantitative easing ; currency intervention ; international monetary system ; Wechselkurspolitik ; Internationales Währungssystem ; Wechselkurs ; Euro ; EU-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Darvas, Zsolt ; Pisani-Ferry, Jean
• Event: Veröffentlichung
• (who): Hungarian Academy of Sciences, Institute of Economics
• (where): Budapest
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/108206
• Last update: 10.03.2025, 11:44 AM CET