A New Bretton Woods

By: Ronald McKinnon

This is the beginning of a discussion series on new currency regimes. Ronald McKinnon argues that the four priorities for reform should be to stabilise exchange rates, reduce large trade imbalances, surpress carry trades, and reduce counterparty risk.

The need for concerted action

By: Jörg Bibow

What is presently dubbed Bretton Woods II is not a sustainable system.

The case against naked CDS

By: Wolfgang Münchau

Credit defaut insurance without ownership of the underlying securities is seriously destabisling.

Is the euro challenging the dollar's role as a global currency?

When the Euro was launched in 1999, there was much speculation among academics and policy makers about whether the euro could challenge, over even overtake, the dollar as an international currency. Toward the end 2006, the euro has indeed become a big international currency, but has so far failed to challenge the dollar’s predominance in the main categories that define it as the world’s premier currency.

Who would have thought that?

The euro area economy turned out to be quite resilient during Q4, while the US was already heading for recession. We stick with our view that a rate cut is definitely not on the agenda for quite some time to come.

Expect no economic decoupling - but policy decoupling

The Fed will keep cutting rates as if there is no tomorrow. In the euro area, yesterday's interest rates are like remain tomorrow's for a long time to come.

What the credit numbers tell us

That there is no credit crisis in the euro area by a long shot - at least not yet.

Don't Count on the ECB to cut interest rates

Neither pillar of the ECB's monetary policy strategy suggests that interest rates should be cut at this point. The euro area is not immune from global developments, but this is not primarily a euro area crisis.

Prepare for a global economic downturn, but not a meltdown

This year marks the start of an asymmetric global economic downturn that is likely to persist for some time and will probably be quite unpleasant, but which will be well short of catastrophic.