Benn Steil

Geo-Graphics

A graphical take on geoeconomic issues, with links to the news and expert commentary.

Bank Burden

by Tuesday, March 24, 2009

A few years ago, countries were seeking to expand their financial sector (move toward the left in the chart) in order to accelerate economic growth. But the crisis has made states more aware of the economic and political risks associated with over-sized banks, as demonstrated by the crisis in Iceland. The crisis has also illustrated the interdependence of the world banking system and the costs of letting foreign banks fail, highlighting the importance of international regulation. The following articles discuss how best to fix finance—through national regulation or international coordination. Read more »

China’s Foreign Assets

by Tuesday, March 17, 2009

China’s holdings of foreign assets have grown dramatically this decade. During the past few years their risk appetite grew as they purchased increasing amounts of foreign equities and corporate bonds. The poor performance of this initial venture into risky assets has given way to a retrenchment from risk. That may be why Premier Wen called for the U.S. “to maintain its good credit, to honor its promises, and to guarantee the safety of China’s assets.” Read more »

Dollar Safe Haven

by Tuesday, March 10, 2009

Global imbalances have raised fears of a dollar crisis. But rather than collapsing, the dollar has grown stronger over the last year. What explains this safe-haven status of the dollar, and can it last? The chart above shows the value of the dollar over the last 35 years, highlighting recessions and significant geopolitical events. Read more »

Eastern European Woes

by Tuesday, March 3, 2009

Many Eastern European countries have a strong need for external financing. Negative current accounts and dangerously high levels of short-term debt are raising fears of financial instability. EU leaders on March 1st rejected calls for a $229 billion rescue fund for struggling economies in the east. Instead of a single plan for the region, the EU will be taking a case-by-case approach. The following articles discuss the problems facing Eastern Europe. Read more »