The New U.S.-Asian Dollar Bloc: And Why Europe Could End Up the Loser
Ezrati, Milton, The International Economy
It does not take deep analysis to see that February's G7 meeting was more than a little contentious and that economic relations between the United States and Europe are strained. The G7's official communique, though blandly written as always, nonetheless gave a hint of the problem, calling simultaneously for the vaguely contradictory objectives of currency stability and flexibility. Europe is desperate because the pricey euro threatens its export prospects and therefore its fledgling economic recovery. The United States, though paying lip service to a strong dollar policy, likes the improved export prospects promised by a cheap dollar. As if to underscore the differences, remarks by European Central Bank (ECB) President Jean-Claude Trichet about currency stabilization met a response from U.S. Treasury Secretary John Snow that he had no idea what Trichet was referencing.
In many respects, this is an old argument, but today it plays out against the backdrop of a relatively new presence in currency markets: a powerful, if informal, currency bloc has developed between the United States and most of Asia. Its currency links relieve U.S. financial markets of any adverse pressure from the dollar's slide. At the same time, they place an …
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Publication information: Article title: The New U.S.-Asian Dollar Bloc: And Why Europe Could End Up the Loser. Contributors: Ezrati, Milton - Author. Magazine title: The International Economy. Volume: 18. Issue: 2 Publication date: Spring 2004. Page number: 48+. © 2009 International Economy Publications, Inc. COPYRIGHT 2004 Gale Group.
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