Davos Annual Meeting 2011 - WHAT IF: competitive devaluation becomes the global norm? | Summary and Q&A

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February 11, 2011
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World Economic Forum
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Davos Annual Meeting 2011 - WHAT IF: competitive devaluation becomes the global norm?

TL;DR

Panel discusses currency wars, Chinese monetary policy, and shifting reserve currencies.

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Key Insights

  • 🫱 Currency wars create instability and tensions in the global economy.
  • 🛟 The role of China's Renminbi as a reserve currency is subject to enhanced convertibility and flexibility.
  • 💱 Realignment of currencies through negotiation may be necessary to address imbalances.
  • 🌍 China's monetary policy and economic growth impact the international monetary system and emerging markets.

Transcript

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Questions & Answers

Q: How are currency wars affecting the global economy?

Currency wars create tensions and imbalances, impacting trade and investment globally. Countries engage in competitive devaluation, affecting exchange rates and trade flows.

Q: What is the role of the Renminbi in the international monetary system?

The Renminbi has potential as a reserve currency, but requires increased convertibility and flexibility. China's monetary policies and economic growth will influence its global standing.

Q: Is realignment of currencies necessary to address imbalances?

Participants suggest realignment through negotiation, reminiscent of Bretton Woods, to address conflicting interests and achieve stability in the international monetary system.

Q: How does China's currency policy impact emerging markets?

China's competitive undervaluation distorts trade and affects emerging markets competing for similar markets and products. Discussions center on the need for a gradual adjustment to prevent disruptions.

Summary & Key Takeaways

  • Panel discusses the impact of currency wars and tensions in the global economy.

  • Views expressed on Chinese currency manipulation and the role of the Renminbi as a reserve currency.

  • Suggestions for potential adjustments to the international monetary system.

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