Showing posts for "Japan"
Because foreign currency reserves are viewed as a form of insurance, the risks of excess reserves are often overlooked. Japan holds reserves equal to 20% of GDP, more than it could possibly need for insurance purposes. These holdings make up a foreign asset portfolio that is subject to exchange rate risk. However, this risk is hidden because Japan’s reserves are primarily held in U.S. dollars and their value is reported in U.S. dollars. So as the local and global purchasing power of the dollar falls there is no change in the reported value of the reserves. As shown in the chart, Japan’s reserves increased by over $100 billion since June 2007, but fell by nearly ¥20 trillion when measured in local currency terms – over 4% of GDP. The risk of large losses in national wealth is even greater for China, whose reserves make up 50% of GDP. This risk will become apparent as and when China allows the renminbi to appreciate, in line with market pressures. Read more »
The Association of Southeast Asian Nations (ASEAN) along with Japan, China, and South Korea says it will launch a $120bn reserve fund, increasing the foreign exchange reserves that the region can draw on in times of turmoil. Japan has offered an additional $60bn via a swap line. Can regional funds provide an Asian alternative to the IMF? Read more »
This chart compares the Treasury and Agency holdings of China and Japan. As the chart shows, the amount of debt that the U.S. owes to China has increased sharply this decade and the amount owed to Japan remains high. Will the United States’ continuing need for financing leave it in a weaker position relative to the major holders and purchasers of U.S. debt? Read more »
The G7 has expressed concern over the implications of excessive yen volatility for financial and economic stability, but fell short of promising coordinated action. The graph above illustrates the extreme nature of the yen’s rise. For example, the yen has appreciated 22% against the euro and 35% against the Aussie dollar in the last month alone. The G7 may have to intervene in foreign currency markets to restore stability. Read more »
After years of celebrating the triumph of market capitalism, many of its advocates today are troubled by the emergence of ‘state capitalism’, particularly in the form of sovereign wealth funds. How should liberal capitalism respond when autocracy is the highest bidder? Is autocratic ownership dangerous to economic robustness? Read more »
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In The Hacked World Order, CFR Senior Fellow Adam Segal shows how governments use the web to wage war and spy on, coerce, and damage each other. More
Red Team provides an in-depth investigation into the work of red teams, revealing the best practices, most common pitfalls, and most effective applications of these modern-day devil's advocates. More
Through insightful analysis and engaging graphics, How America Stacks Up explores how the United States can keep pace with global economic competition. More
India now matters to U.S. interests in virtually every dimension. This Independent Task Force report assesses the current situation in India and the U.S.-India relationship, and suggests a new model for partnership with a rising India.
Rates of heart disease, cancer, diabetes, and other noncommunicable diseases (NCDs) in low- and middle-income countries are increasing faster than in wealthier countries. The report outlines a plan for collective action on this growing epidemic.
This report asserts that elevating and prioritizing the U.S.-Canada-Mexico relationship offers the best opportunity for strengthening the United States and its place in the world.
Williams argues that the status quo for peace operations in untenable and that greater U.S. involvement is necessary to enhance the quality and success of peacekeeping missions.
The authors argue that the United States has responded inadequately to the rise of Chinese power and recommend placing less strategic emphasis on the goal of integrating China into the international system and more on balancing China's rise.
Campbell evaluates the implications of the Boko Haram insurgency and recommends that the United States support Nigerian efforts to address the drivers of Boko Haram, such as poverty and corruption, and to foster stronger ties with Nigerian civil society.