From FT:

Time for the ECB to get serious about the overvalued euro - Willem Buiter

Why the euro is not the next global currency - Jean Pisani-Ferry and Adam Posen

Safe as houses - FT editorial on new mortgage regulation

From elsewhere:

The global crisis and central banks in Latin America: Breaking with the past - Luis I. Jácome H., VOXEU

The secret Paulson-Goldman meeting - Felix Salmon, Reuters

Why Is The Chamber Of Commerce Defending Big Banks? - Simon Johnson, Baseline Scenario

So Now We Know Why Lehman Went Under - Naked Capitalism

It is the season of dollar panic. These panic-mongers are varied: gold bugs, fiscal hawks and many others agree that the dollar, the dominant currency since the first world war, is on its death bed. Hyperinflationary collapse is in store. Does this make sense? No. All the same, the dollar-based global monetary system is defective. It would be good to start building alternative arrangements.

Continue reading "The rumours of the dollar’s death are much exaggerated"

From the FT:

Neil Dennis: Sterling declines after inflation hits 5-year low

UK Daily View: Chris Giles on the significance of a five-year low for consumer price inflation (video)

Peter Garnham: Ragged pound may prove the best ballast for rebalancing

Editorial: The upside of sterling’s slide

Peter Garnham: Weak dollar hides feeble pound

From Elsewhere:

World Bank Crisis Talk: Pity the pound

The Independent: Talking down the pound

Evening Standard: Why it’s a good thing the pound is weaker

From the FT:

Dave Shellock: Overview: gold hits record high as dollar tumbles

Martin Sandbu: The dollar: It would take a revolution to overthrow the greenback

Jennifer Hughes: Mighty dollar turns a paler green

Elsewhere:

Neal Kimberley, Reuters Blog: “Dollar demise”: Inexorable but not sudden

Menzie Chinn, Econbrowser: The Dollar in Doubt?

Simon Johnson, Peterson Institute: Obama’s secret jobs plan; the dollar plunge

Dean Baker, CEPR: Big Deficit Bob Rubin and the Strong Dollar

By Ronald McKinnon

Tensions between the US and China escalated recently when Timothy Geithner, the new US Treasury secretary, suggested that China might be designated as a “currency manipulator’. Premier Wen Jiabao mounted a vigorous defence of China’s existing exchange rate policy at a high level meeting of world leaders at Davos, Switzerland. Mr Wen pledged to keep the renminbi at a “reasonable and balanced level”. Continue reading "China’s exchange rate policy is the quid pro quo for fiscal expansion"

By Eswar Prasad

Timothy Geithner, in his first foray into international economic affairs as US Treasury secretary, has kicked off a public row with the Chinese by accusing them of currency manipulation. The Chinese have vehemently rebutted this accusation and flexed their own muscles, telling the US to get its own house in order before lecturing others.

The world economy, already on its knees, cannot afford escalating economic tensions between China and the US. Continue reading "The US and China: A grand bargain?"

By Michael Spence

The accelerating asset deflation globally is going to cause a deep global recession. The deleveraging process is driving emergency sales of assets, capital hoarding and asset prices (including exchange rates) to overshoot any reasonable estimate of intrinsic values. Continue reading "A co-ordinated asset purchase programme: reversing a huge asset deflation overshoot"

By Maurice Obstfeld, Jay C. Shambaugh and Alan M. Taylor

Since the early 1990s, central banks in many emerging markets and developing countries have accumulated foreign reserves at an unprecedented rate. The macroeconomic impact of these official flows has been profound and they have contributed significantly to global imbalances. Providing an explanation for these trends remains a major puzzle in international macroeconomics, and prevailing theories based on trade or debt deliver poor empirical performance. We argue that part of this great reserve accumulation is a response to the threat of financial instability in the context of rapidly expanding financial systems, increasingly mobile capital, and exchange rate objectives. The recent turbulence in global financial markets supports this view. Continue reading "Reserve accumulation and financial stability"