mbalances are a dominant feature of the world economy and they are often seen as having contributed to the global financial crisis. A revaluation of the Chinese currency is often recommended to reduce the current account imbalance between the US and China. This article argues that emerging Asia’s current account surpluses are a necessary condition for rapid catch-up growth and should not be eliminated soon; instead the excessive dollar bias in Asian holdings of external claims needs to be reduced, because the problem behind the recent crisis was that the emerging economies have placed their foreign exchange reserves almost exclusively in USD assets and have neglected alternative assets like the Euro and the Yen. A policy proposal for a common Asian peg to a basket of Euro and Yen is made.
Rebalancing the global economy
COLLIGNON, STEFAN
2012-01-01
Abstract
mbalances are a dominant feature of the world economy and they are often seen as having contributed to the global financial crisis. A revaluation of the Chinese currency is often recommended to reduce the current account imbalance between the US and China. This article argues that emerging Asia’s current account surpluses are a necessary condition for rapid catch-up growth and should not be eliminated soon; instead the excessive dollar bias in Asian holdings of external claims needs to be reduced, because the problem behind the recent crisis was that the emerging economies have placed their foreign exchange reserves almost exclusively in USD assets and have neglected alternative assets like the Euro and the Yen. A policy proposal for a common Asian peg to a basket of Euro and Yen is made.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
