www射-国产免费一级-欧美福利-亚洲成人福利-成人一区在线观看-亚州成人

USEUROPEAFRICAASIA 中文雙語Fran?ais
Opinion
Home / Opinion / Op-Ed Contributors

Trumping the global monetary system

By ANDREW SHENG/XIAO GENG | China Daily | Updated: 2016-12-16 07:45

Trumping the global monetary system

US President-elect Donald Trump speaks at election night rally in Manhattan, New York, US, November 9, 2016. [Photo/Agencies]

It is difficult to know exactly what US president-elect Donald Trump will do when he takes office in January. But thanks to his vow to pursue tax cuts and increase infrastructure spending, financial markets expect faster growth in the United States-a perception that is boosting the dollar's exchange rate against most currencies, including the renminbi, and triggering capital flight from emerging economies.

Notwithstanding Trump's vow to impose tariffs of up to 45 percent on Chinese goods, a resurgent dollar will hurt the US' trade competitiveness, as according to the International Monetary Fund, the dollar was already about 10-20 percent overvalued in June.

And while trade is supposed to be the primary driver of exchange rates, capital flows have grown to the point that their role in guiding exchange rates is now much larger. In this context, market optimism about US growth could lead to ever-larger imbalances and possibly disrupt the international monetary system.

Besides, from 1997 to 2007, the US net investment deficit widened by only $0.3 trillion, while the net investment surpluses of China, Japan and Germany rose by $1.2 trillion, $1.1 trillion, and $0.8 trillion. The major investment-deficit players were the eurozone minus Germany, with a deficit of $2.4 trillion during that decade, and the UK, with a deficit of $0.5 trillion.

Over the next seven years, until 2014, the US' net investment position declined by $5.7 trillion, leading to a liability of 40.2 percent of GDP. Germany's net investment surplus increased by $0.8 trillion, Japan's rose by $1.2 trillion, and China's was up by $0.7 trillion. The rest of the world's net investment position strengthened by $3 trillion during this period, owing mainly to the commodity boom, which faded as China's economy slowed.

The rapid growth in the US' gross liabilities to the rest of the world is apparent in the US Treasury data on foreign holdings of US securities, which rose from $9.8 trillion in 2007 to $17.1 trillion in June 2015, of which $10.5 trillion was debt and $6.6 trillion equity. Foreign holdings of US securities were equivalent to 95 percent of the country's GDP in June 2015.

Against this background, policies that will strengthen the dollar considerably could prove highly problematic. As the dollar strengthens, the value of US holdings of foreign assets will decline in dollar terms, while the country's liabilities will continue to grow, owing to sustained fiscal and current account deficits (now around 3-4 percent of GDP annually). The result will be further deterioration of the US' net investment position, which the IMF has projected will reach minus 63 percent of GDP by 2021.

The truth is that it is unlikely that the dollar-induced imbalances will be sustainable. The other reserve-currency countries will probably continue to allow their currencies to depreciate, in order to reflate their economies, and emerging economies will probably continue to use exchange rates to cope with capital-flow volatility. If this continues, the strain on the international monetary system will only intensify.

There is something that can be done to ease the pressure. During the global economic crisis, the Fed eased global liquidity shocks by undertaking currency swaps with other major central banks. It could undertake similar swaps today, but with countries facing large capital outflows, thereby slowing the dollar's appreciation. The question is whether the US under Trump would be willing to develop currency-swap arrangements and other coordination mechanisms for emerging economies such as Russia and China.

At a time of far-reaching economic and geopolitical risks, investors view the US dollar as a safe haven. But, in time, they may find that a new Plaza Accord-the 1985 agreement to devalue the dollar and push the Japanese yen and the Deutsche mark sharply upward-will become necessary. Trump bought the Plaza Hotel three years later, but sold it in 1995. So, this time, it might be called the "Trump Tower Accord".

Andrew Sheng is distinguished fellow of the Asia Global Institute at the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance, and Xiao Geng, president of the Hong Kong Institution for International Finance, is a professor at the University of Hong Kong.

 

Most Viewed in 24 Hours
Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263

Registration Number: 130349
FOLLOW US
主站蜘蛛池模板: 91久久香蕉青青草原娱乐 | 九九99香蕉在线视频免费 | 国产黄色片一级 | 成人精品视频 | 亚洲成人黄色片 | 亚洲人成网站观看在线播放 | 欧美高清视频在线 | 国产午夜在线观看视频播放 | 亚洲最大的视频网站 | 久草在线影 | www.久久精品| 欧美国产成人一区二区三区 | 色婷婷91 | www.日本在线 | 日韩性色 | 在线观看成年视频 | 精品国产一二三区 | 免费一级特黄特色黄大任片 | 成年人在线观看视频网站 | 99久久精品国产免费 | 亚洲图片国产日韩欧美 | 久草在线最新 | 欧美精品一区二区三区四区 | 亚洲特一级毛片 | 爱逼综合网 | 牛牛本精品99久久精品88m | 国产精品福利视频萌白酱 | 成人精品视频一区二区三区 | 怡红院在线视频观看 | 国产不卡视频在线观看 | 97se亚洲综合在线韩国专区福利 | 亚洲精品区 | 久草草视频在线观看免费高清 | 99久久精品免费看国产高清 | 91啦丨国产丨 | 亚洲黄色三级视频 | 天海翼精品久久中文字幕 | 欧美日中文字幕 | 亚洲波多野结衣日韩在线 | 日本强不卡在线观看 | 久久在线资源 |