China's peg harms economy

China's exchange-rate regime, which pegs the renminbi to the dollar, exacts high welfare costs from different sectors of the economy and poses long-term risks to financial stability, claims a new paper published by the European Central Bank.

The research finds that the peg is contributing to a massive accumulation of foreign reserves, which has led to a liquidity overhang in the financial system and a credit boom. Excessive credit provision in turn has fuelled overinvestment with detrimental

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Geoeconomic reserve management

The world order is evolving. Whether, and how, the international economy remains integrated or shifts into spheres of influence has consequences for central bank policy and reserve management.

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