Currency Wars: What do effective exchange rates tell us?
In November, South Korea joined the ranks of countries striving to limit the upwards pressure on their currency when two lawmakers submitted a parliamentary proposal to impose various taxes on foreign capital inflows and outflows. If any of these measures pushes through, South Korea would become the first (traditionally financially liberalised) OECD country to reinstate capital controls. This brings the list of countries intervening directly, indirectly or considering intervention to more than 23. This is an unwelcome and disturbing, but hardly surprising, development: as policy rates in the US are at near-zero levels and monetary policy is geared towards managing the yield curve in order to meet domestic objectives, emerging countries throughout the world are scrambling to protect themselves from the negative spillovers in the form of massive capital inflows...
About the authors
Related content
An investment strategy to keep the European Green Deal on track
In this Policy Brief, we assess the investment needed to achieve the 2030 climate goal and climate neutrality by 2050
The EU Needs a Strong Clean Industrial Deal
The European Union must implement a new Clean Industrial Deal that promotes decarbonization alongside sustainable growth and industrial development
Barnier’s balancing act: a skilful but precarious budget plan
The French government’s proposal to make the deficit manageable carefully balances different objectives but leaves tough choices for the future
