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October 14, 2008 | UK: Stay Away From Joining the Euro

Though the UK economy has become more “European,” one area of contrast endures: the euro. ++ UK capitalism has been discredited and the credit crunch will be a test that may prove independent currency is bad for financial stability, reviving the case for joining the euro. ++ However, disparities in production, investment, wages and yields between EU countries could unravel the entire currency. ++

October 6, 2008 | Potential EU Monetary Crisis - Recapitalize Now

Despite the success of some initial bank bailouts granted by the EU, such as Fortis, Europe is still short of an overall financial strategy. ++ Three things are needed: first, money to recapitalize the banking sector; second, a semi-permanent EU crisis committee to make financial decisions; and third, clear rules indicating when to recapitalize. ++ Sarkozy was right to support a EUR 300 billion

September 16, 2008 | The Euro, Still Going Strong

The Euro is not yet ten years old, but its success to date has been unquestionable. ++ Despite numerous exogenous shocks - ranging from the specter of terrorism to the subprime mortgage meltdown in the US - the Euro is still going strong. ++ Without a single currency, member states of the European Monetary Union would likely be experiencing the capital exploitation and speculation seen in the

September 5, 2008 | The Bank Must End the "Euro's Wild Rise"

The downturn of economic activity in the Eurozone has come as a surprise. ++ The twin shock of the exchange rate of the euro and oil prices squeezed profits from exporting firms. ++ The opposite has happened in the US, where the export sector is booming. ++ The European Central Bank allowed this to happen by only caring about price stability and allowing massive euro appreciation. ++ The ECB

August 12, 2008 | Euro's Joyride is Coming to an End

Even though the European Central Bank reassures the investors that the euro has great prospects, business activity on the Old Continent is falling and consumer confidence is plummeting. ++ On Friday, the euro had its worst day against the dollar in 4 years and there are reasons to believe this was not a temporary blip, but the beginning of a trend. ++ Analysts were so focused on American economic

July 14, 2008 | Europe Should Lead Global Financial Reform

Outperforming the dollar and the yen, the euro is a resounding success. ++ Still, Eurozone policymakers should allow for more economic freedom and encourage competition. ++ Europe should stop supporting national enterprises and give the ECB more support. ++ In terms of external economic policy, Europe should offer the world its experience and help reform the G8 and IMF as well as deal with

June 2, 2008 | US Deficit and Sinking Dollar: The Agenda of a New G5

The US dollar was for a long time the leading global currency against which all other foreign currencies were measured. The downside of this is that as a result, the USA has accumulated a huge trade deficit. In 2006, foreign goods and services purchased by Americans were worth 600 billion USD more than the goods and services they sold abroad. Every day, the US needs to draw on seven billion

April 23, 2008 | A Rising Euro Threatens American Dominance

The Fed is undermining global confidence by flooding the economy with new dollars while it should in fact be pursuing direct and targeted intervention. ++ Since US global purchasing power is used for humanitarian, economic or military purposes, a further fall of the dollar will damage US political influence. ++ The rise of transactions in Euros neuters US ability to control financial flows to

April 9, 2008 | The Eurozone Should Assume Global Leadership

The IMF’s need for governance reform points to the EU’s lack of management of its external monetary policy. ++ Consolidating the representation of Eurozone members on the board - currently 15 members are awkwardly split among 8 chairs - would increase effectiveness, give the EU a voting power that truly reflects the euro’s strength on bond and currency markets, and strengthen the voice of

May 31, 2007 | Bruegel Says Worldwide Exchange Rates Adjustment Would Fight Current Account Deficits

The March 2007 Bruegel Policy Brief reveals that imbalances in global current account positions are not sustainable and need adjustment. A 15% depreciation of the dollar and an appreciation of Asian currencies is needed in order to:

• reduce the US current account deficit,
• faciliate China’s focus on domestic demand and reduce its accumulation of foreign exchange reserves, and
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