Opinion
Can Bank of England's Mervyn King take on Blair?
With a general election set for 5 May in the UK, this article asks whether the Bank of England will take on Tony Blair and raise rates on Thursday risking a political backlash from the party that looks set to win the election. Or keep them on hold, and…
Are Korea's rising foreign reserves bane or boon?
Korea's massive foreign reserves have sparked debate on the optimum level of reserves and the management of the currency supply. But according to this article, 'Are rising foreign reserves bane or boon?', the key question is not what level the central…
How foreign reserves could make China yet stronger
This article says China's burgeoning foreign exchange reserves could provide an ideal remedy if the country's financial system is too fragile to sustain high growth levels in the long term. Up to $500 billion could be put into a social reconstruction…
Asian central banks' dilemma
Diversification away from dollar denominated foreign exchange reserves is a natural reaction for Asian central banks, this article says. But because of the size of their holdings, any sudden move to sell a substantial part of these holdings could cause a…
The Bank should act soon
The Bank of England should act soon to raise interest rates, according to this article published on Friday 4 March by the Financial Times. With a general election expected in May, the Bank risks being accused of political motivations if it doesn't hike…
Asian central bankers affecting markets
The dollar's nearlythree-year decline has led many central banks to consider diversifying into other types of money, especially in the face of a more valuable euro. According to this article, the reaction to recent comments from South Korea serves as a…
Should the euro be the reserve currency?
In this article published on Sunday 27 February, Roger Bootle says that although South Korea denied speculation it is considering switching some of its reserves out of dollars and into euros, it would be startling if South Korea, and other countries,…
Foreign reserves, Asia's problem of plenty
The dilemma facing many of emerging Asia's economies over how best to use their massive stock of dollar reserves is hardly new, this article says, but some economists suggest spending central bank reserves on domestic projects, rather than leaving them…
A slow boat to yuan devaluation
This article says China is probably a decade away from a free floating yuan and full-blown capital liberalization. A more realistic option, it says, would be a two-stage program that involves a widening of the yuan trading band and the adoption of a…
Minneapolis Fed: Avoiding monetary policy mistakes
The Federal Reserve Bank of Minneapolis Quarterly Review December 2004 article 'Avoiding significant monetary policy mistakes' by Gary Stern and Preston Miller deduces properties of optimal monetary policies based on modern theory and standard empirical…
IMF gold sales - Why it will be a non-event
This article considers the idea of the IMF selling off some of its gold reserves and using it to give poor nations debt relief. It says the IMF should instead return the gold to member nations or at least use the gold as a reserve asset as it was meant…
Fed officials don't see China dropping peg soon
According to this article published Friday 11 February, Federal Reserve officials aren't optimistic that China will drop its currency peg against the dollar anytime soon with the decision in the hands of the State Council.
Fed's increase is case of perfect transparency
The FOMC's recent action to raise interest rates had been fully anticipated with not a single point move on the yield curve, from two years to 10 years. This article describes the move as a case of perfect transparency.
Does Europe need stability or flexibility?
After long fighting a weakening of the stability and growth pact, it now appears as if Brussels is willing to play along. This article looks at the expected revamp of the pact and asks whether it will hurt or help Europe's economy.
When monetary tools start to lose their edge
This article asks what central bankers do when their monetary tools begin to lose their edge. This may be a question that the Federal Reserve is having to address at the moment, it says. The Federal Reserve's challenge seems to be that the linkage…
Deficit triggers rumbling at Fed
George Bush's longtime honeymoon with the Federal Reserve may be ending, this article suggests. The new element is a rising concern at the Fed about the US budget deficit, which hit $413 billion in 2004; a low and declining national savings rate and…
PBOC, modelled on Fed, bows to politics
When China's top policy makers set out to streamline the country's 57-year-old central bank system six years ago, they chose the U.S. Federal Reserve as a model, this article says. But while the People's Bank may be gaining clout as China's economy grows…
A higher yuan: When, not if
Sooner or later, China will have to hike its currency against the dollar, this article argues. The peg which keeps the yuan's value fixed against the greenback, has been the 'bete noire' of U.S. manufacturers, who complain that it gives Beijing an unfair…
The Fed's muddled minutes
Drawing the correct conclusions from the Federal Reserve's minutes is tricky, according to this article. The minutes are meant to portray the nuanced discussions that led to the FOMC's policymaking statement. In that sense, the minutes can be said to…
IMF on interest-rate liberalization in China
A recently published article by two members of the IMF's China Division looks at the recent decision by the People's Bank of China to raise interest rates for the first time in nine years. The liberalization of rates is a landmark change, it says, and…
Rushed Fed minutes could use a good rewrite man
The Federal Reserve's decision to publish the minutes of its FOMC meetings with a three-week instead of a six-week lag seems to have sacrificed clarity for speed, according to this article. The thought processes reflected in the minutes come across as…
Norway's Gjedrem: 'Monetary policy is functioning'
In an article published by Aftenposten on 3 January, Norges Bank governor Svein Gjedrem said the Norwegian economy is growing at a solid pace, and there are prospects that growth will remain high in the year ahead.
A not-so-merry Christmas message
Giving the Henry Thornton lecture at the Cass Business School in London on Wednesday 15 December, the economic historian Barry Eichengreen gave his view on the international financial system, and issued a worrying warning to those that downplay the…