Chinese currency manipulation not a problem

A Chinese clerk counts renminbi banknotes at a bank in Huaibei city, Anhui province, China on 22 January 2015. (Photo: AAP).

Author: Jeffrey Frankel, Harvard University

America’s two political parties rarely agree, but one thing that unites them is their anger about ‘currency manipulation’, especially by China. Perhaps spurred by the recent appreciation of the dollar and the first signs that it is eroding net exports, congressional Democrats and Republicans are once again considering legislation to counter what they view as unfair currency undervaluation. Read more…

IMF reform and isolationism in the US Congress

International Monetary Fund Managing Director Christine Lagarde and U.S. President Barack Obama arrive for the plenary session of the Asia-Pacific Economic Cooperation summit in 2011 in Kapolei, Hawaii. (Photo: AAP).

Author: Jeffrey Frankel, Harvard University

A long-awaited reform of the International Monetary Fund has now been carelessly blocked by the US Congress. This decision is just the latest in a series of self-inflicted blows since the turn of the century that have needlessly undermined the claim of the United States to global leadership. Read more…

The renminbi’s rise as an international currency: historical precedents

An elderly man walks past a poster advertising the renminbi (RMB) currency (Chinese yuan) in Hong Kong on 18 August 2011. (Photo: AAP)

Author: Jeffrey Frankel, Harvard University

All of a sudden, the Chinese renminbi is being touted as the next big international currency.

It has begun to internationalise along a number of dimensions in the last year or two: an RMB-denominated bond market has grown rapidly in Hong Kong, as well as a market in RMB-denominated bank deposits. Read more…

Emerging countries must unite to win IMF leadership

French Minister for Economy Christine Lagarde speaks to journalists before visiting a Monoprix French supermarket focused on luncheon vouchers for employees, in Paris, France, 19 May 2011. Lagarde is one of the favourite successors to head the International Monetary Fund (IMF) after the resignation of French Dominique Strauss-Kahn, four days after being arrested in New York on suspicion of sexually assaulting and attempting to rape a 32-year-old chamber maid in his luxury hotel suite. (Photo: AAP

Author: Jeffrey Frankel, Harvard University

It is time for the Managing Director of the International Monetary Fund to come from an emerging market country.

But that has been said often before. Whining about the injustice of the 65-year duopoly under which the IMF MD comes from Europe and the World Bank President comes from the US won’t change anything. Read more…

G20: Leadership need not only come from the G7

German Chancellor Angela Merkel, left, French President Nicolas Sarkozy, Italian Prime Minister Silvio Berlusconi, Japan’s Prime Minister Taro Aso and Russian President Dmitry Medvedev at the 2009L’Aquila G8 Summit: After the smaller group, will the G20 prove too unwieldy?  (Photo: Michael Gottschalk/AP/AAP)

Author: Jeffrey Frankel, Harvard

Korea has an opportunity to exercise historic leadership when it chairs the G20 meeting in Seoul. This will be the first time that a non-G7 country has hosted the G20 since the larger, more inclusive, group supplanted the smaller rich-country group in April 2009 as the premier steering committee for the world economy. With large emerging market and developing countries playing such expanded roles in the world economy, the G7 had lost legitimacy. It was high time to make the membership more representative. But there is also a danger that the G20 will now prove too unwieldy, in which case effective decision-making might then revert to the smaller group.

When countries like China and India used to demand a larger voice in world governance based on their large populations, they did not get very far. Read more…

Food security: Grain price volatility caused not cured by export controls

Wheat crop in Vidarbha, India. (Photo: Flickr user 'Frozen Photon')

Author: Jeffrey Frankel, Harvard

I recently listed some policies and institutions with which various small countries around the world have had success — innovations that might be worthy of emulation by others. Of course there are plenty of other examples of policies and institutions that have been tried and that are to be avoided. The area of agricultural policy is rife with them. Many start with a confused invoking of the need for ‘food security.’

The recent run-up in wheat prices is a good example. Robert Paarlberg wrote an excellent column in the Financial Times recently, titled ‘How grain markets sow the spikes they fear.’ Read more…

Gulfs in America’s energy security, and the Louisiana oil blowout

From foreground, the mobile offshore drilling unit (MODU) Development Driller II prepares to drill a relief well at the site of the Deepwater Horizon oil spill, on May 18, 2010. (Photo: US Department of Defense)

Author: Jeffrey Frankel, Harvard

In the wake of the April oil well blowout off the coast of Louisiana, policy makers are rethinking the issue of offshore drilling. Clearly the last decade’s neglect of safety rules by federal regulators needs to come to an end. But what larger implications should we draw for domestic oil drilling?

The tension has long been between those who give primacy to the environment, on the one hand, and those who give primacy to business on the other. Read more…