Benn Steil

Geo-Graphics

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

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Showing posts for "China"

Notable Quotables From THE BATTLE OF BRETTON WOODS

by Benn Steil
J. M. Keynes, flanked by Soviet delegation head M. S. Stepanov (left) and U.S. delegation head Henry Morgenthau, Jr. (right), addressing delegates at the Bretton Woods conference, July 1944 (Bettmann/CORBIS). J. M. Keynes, flanked by Soviet delegation head M. S. Stepanov (left) and U.S. delegation head Henry Morgenthau, Jr. (right), addressing delegates at the Bretton Woods conference, July 1944 (Bettmann/CORBIS).

“The various currencies, which were all maintained on a stable basis in relation to gold and to one another, facilitated the easy flow of capital and of trade to an extent the full value of which we only realize now, when we are deprived of its advantages.”
- Keynes on the classical gold standard (72) Read more »

Is the BRICS Contingent Reserve Arrangement a Substitute for the IMF?

by Benn Steil and Dinah Walker
BRICS CRA vs IMF borrowing

Russian President Vladimir Putin has hailed the new BRICS contingent reserve arrangement (CRA) as a substitute for the IMF, saying that it “creates the foundation for an effective protection of our national economies from a crisis in financial markets.” But does it? Read more »

Is the BRICS Bank More “Democratic” Than the World Bank?

by Benn Steil and Dinah Walker
brics bank world bank founders vs non founding members

The launch of the new BRICS development bank “reflects the disparity and democratic deficiency in the global governance and is trying to restart, to rethink that,” according to Nobel economist Joseph Stiglitz.  But is the BRICS bank really more “democratic” than the World Bank, whose governance legitimacy its founders are challenging? Read more »

Hurling BRICS at the World Bank and the $

by Benn Steil and Dinah Walker
brics bank world bank

Brazil, Russia, India, China, and South Africa (the “BRICS”) made a splash last week with the official launch of their new development bank.  The backers made no secret of their intention to challenge the way things are done in the established international financial and monetary architecture. Read more »

China, not Piketty, Explains “Confused Signals” in U.S. Asset Prices

by Benn Steil and Dinah Walker
china drives down treasury yields

The FT’s Ed Luce recently took on the “confused signals” being sent by U.S. stock and bond prices moving in sync (upward).

Which is it, he asks?  Are economic prospects good, as stock prices suggest, or bleak, as bond prices suggest? Read more »

China’s RMB Fairly Valued, Euro Overvalued, According to Our Geo-Graphics iPad mini Index

by Benn Steil and Dinah Walker

The “law of one price” holds that identical goods should trade for the same price in an efficient market. To what extent does it hold internationally?

The Economist magazine’s famous Big Mac Index uses the price of McDonald’s burgers around the world, expressed in a common currency (U.S. dollars), to estimate the extent to which various currencies are over- or under-valued. The Big Mac is a global product, identical across borders, which makes it an interesting one for this purpose. Yet it travels badly—cross-border flows of burgers won’t align their prices internationally. Read more »

Is a “Decisive Role” for Market Forces in China Compatible with a 7 Percent Growth Target?

by Benn Steil and Dinah Walker
china target vs us forecast

The Chinese government is early next year expected to announce a 7% growth target for 2014, a rate China has managed to exceed every year since 1990.  Chinese growth has also exceeded the government target at least as far back as 2001 (the first year for which we have found such targets); the target has therefore in essence been a floor.  In contrast, as today’s Geo-Graphic shows, the White House has overestimated U.S. growth 70% of the time since 2001. Read more »

The New Geo-Graphics iPad Mini Index Should Calm Talk of Currency Wars

by Benn Steil and Dinah Walker

The “law of one price” holds that identical goods should trade for the same price in an efficient market.  To what extent does it hold internationally?

The Economist magazine’s famous Big Mac Index uses the price of McDonalds’ burgers around the world, expressed in a common currency (U.S. dollars), to estimate the extent to which various currencies are over- or under-valued.  The Big Mac is a global product, identical across borders, which makes it an interesting one for this purpose.  Yet it travels badly – cross-border flows of burgers won’t align their prices internationally. Read more »

Can China’s Bond Market Support a Global RMB?

by Benn Steil and Dinah Walker
RMB

On April 24, the Australian central bank announced that it would raise the proportion of its reserves devoted to Chinese financial assets from 0% to 5%, likely among the highest such allocations among world central banks.  Will other major central banks follow suit? Read more »

Dr. Strangelove or: How China Learned to Stop Worrying and Love the Dollar

by Benn Steil and Dinah Walker
currency wars

China has since 1994 operated some form of currency peg, harder or softer, between its yuan and the U.S. dollar. While China’s state-run Xinhua news agency has in recent years railed against U.S. management of the dollar, and has called for “a new, stable, and secured global reserve currency,” this week’s Geo-Graphic illustrates why China has little incentive to press for such a thing. Read more »