This paper presents the view that it is not constructive to start the analysis of international payments imbalances from the US current account deficit. It is more informative to start from excess of savings over inve...This paper presents the view that it is not constructive to start the analysis of international payments imbalances from the US current account deficit. It is more informative to start from excess of savings over investment in Asia. This imbalance principally arises because of a fall in the investment ratio rather than a rise in the saving ratio, and traces its origin to the after-effects of the Asian Crisis of 1997/98. In the final section the case of China is addressed, and the view is put forward that the combination of rapid economic growth, a fixed exchange rate and persistent current account surpluses is not sustainable into the medium term, and it is in China＇s domestic interests to adjust its exchange rate. Whether or not this has an appreciable influence on other countries＇ balance of payments positions is of secondary importance.展开更多
From the 1970s, the global currency system has two features： the use of one or a few sovereign currencies as the global reserve asset and the floating exchange rate regime between major currencies. This paper points ...From the 1970s, the global currency system has two features： the use of one or a few sovereign currencies as the global reserve asset and the floating exchange rate regime between major currencies. This paper points out that the costs of the dollar＇s use as an international reserve currency exceed the benefits for both the US and the rest of the world. These costs include the exporting of American manufacturing as a byproduct of its current account deficit needed to supply its currency to the rest of the world. In addition to the detriment to trade from unpredictable exchange rate fluctuations, the termination of the U.S. obligation to redeem its currency for gold also removed an important restraint on deficit financing for the US and many other countries in the short-run, thus promoting excessive leverage that was a major contributor to the 2008 financial crisis. The paper suggests replacing several main countries＇ currencies in international reserves with a real Special Drawing Right （SDR） issued according to currency board rules.展开更多
文摘This paper presents the view that it is not constructive to start the analysis of international payments imbalances from the US current account deficit. It is more informative to start from excess of savings over investment in Asia. This imbalance principally arises because of a fall in the investment ratio rather than a rise in the saving ratio, and traces its origin to the after-effects of the Asian Crisis of 1997/98. In the final section the case of China is addressed, and the view is put forward that the combination of rapid economic growth, a fixed exchange rate and persistent current account surpluses is not sustainable into the medium term, and it is in China＇s domestic interests to adjust its exchange rate. Whether or not this has an appreciable influence on other countries＇ balance of payments positions is of secondary importance.
文摘From the 1970s, the global currency system has two features： the use of one or a few sovereign currencies as the global reserve asset and the floating exchange rate regime between major currencies. This paper points out that the costs of the dollar＇s use as an international reserve currency exceed the benefits for both the US and the rest of the world. These costs include the exporting of American manufacturing as a byproduct of its current account deficit needed to supply its currency to the rest of the world. In addition to the detriment to trade from unpredictable exchange rate fluctuations, the termination of the U.S. obligation to redeem its currency for gold also removed an important restraint on deficit financing for the US and many other countries in the short-run, thus promoting excessive leverage that was a major contributor to the 2008 financial crisis. The paper suggests replacing several main countries＇ currencies in international reserves with a real Special Drawing Right （SDR） issued according to currency board rules.
