Papiers / Papers

Global currencies for tomorrow: a European perspective

This report examines how the international monetary system (IMS) might evolve and the implications of different scenarios for the euro area over the next fifteen years.

After the collapse of the Bretton Woods system forty years ago, the IMS gradually developed into its present state, a hybrid mix of exchange-rate flexibility, capital mobility and monetary independence. The US dollar retains a dominant, but not exclusive, role and the IMS governance system blends regional and multilateral surveillance. It combines IMF-based and ad-hoc liquidity provision.

Although it has proved resilient during the crisis, partly thanks to ad-hoc arrangements, the IMS has serious flaws, which are likely to be magnified by the rapid transformation of the global economy and the increasing economic power of emerging economies.

by Ignazio Angeloni, Agnès Bénassy-Quéré, Benjamin Carton, Christophe Destais, Zsolt Darvas, Jean Pisani-Ferry, André Sapir, Shahin Vallée on 23rd July 2011

 

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An action plan for Europe's leaders

By Benedicta Marzinotto, Jean Pisani-Ferry and Guntram B. Wolff 

• At the extraordinary European Council of 21 July European leaders should first pave the way to restoring solvency in Greece by initiating debt reduction. This implies: i) reducing the interest rate on official lending, ii) requesting from the European Financial Stability Facility (EFSF) support for an immediate bond buy-back programme, and iii) asking the European Systemic Risk Board (ESRB) for an immediate evaluation of the risks to financial stability involved in a future restructuring of sovereign debt in the euro area.
 

• Second, immediate growth-enhancing measures should be financed through unused European Union Structural Funds and European Investment Bank loans (€16 billion), which should be used to: i) raise the quality of higher education, ii) finance wage subsidies in manufacturing and tourism to generate an internal devaluation while containing domestic demand costs; and iii) create research laboratories to underpin an upgrading of Greece’s value chain.

• Third, risks to financial stability in the euro area should be addressed by breaking the vicious circle of sovereign debt and banking risk. The EFSF should be able to guarantee national deposit insurance schemes; at the same time, the European Banking Authority should assume stronger supervisory powers.

• This is an immediate action plan. More ambitious reform should follow. The authors are, respectively, Research Fellow, Director, and Deputy Director at Bruegel. Christophe Gouardo provided excellent research assistance.

 

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L'émergence de la Chine (rapport du CAE) - commentaire

Ce rapport est très bienvenu. Il traite d’une question de première importance, qui fait l’objet de débats publics fréquents mais à laquelle les économistes français et européens ne se sont pas assez consacrés. En livrant une analyse fouillée de la croissance chinoise et de son impact sur les pays avancés, Patrick Artus, Valérie Plagnol et Jacques Mistral fournissent des matériaux pour un débat plus informé et plus mûr. Sur beaucoup de points, le rapport emporte l’adhésion. On ne saurait trop souligner l’importance de sa recommandation centrale selon laquelle les entreprises et les gouvernants français et européens doivent rompre avec les attitudes timorées, « faire le pari chinois », et considérer pleinement la Chine comme un partenaire. Pour se convaincre de sa pertinence, il n’est que de se remémorer la teneur du débat public sur la menace que représenterait le développement économique chinois ; ou que de comparer la présence des entreprises françaises et allemandes sur le marché chinois.
 

Le rôle d’un discutant est cependant de se concentrer sur ceux sur lesquels il y a nuance ou désaccord. J’en retiendrai trois :
• le diagnostic d’ensemble sur le développement chinois et la mutation du mode de croissance ;
• les questions de l’équilibre extérieur et du change ;
• l’idée selon laquelle la Chine et l’Europe sont des partenaires naturels face aux États-Unis.

 

Télécharger le commentaire complet Download 201105 CAE Commentaire Chine

Et le rapport complet du CAE Download 201105 CAE Rapport Chine

What international monetary system for a fast-changing world economy?

Though the renminbi is not yet convertible, the international monetary regime has already started to move towards a 'multipolar' system, with the dollar, the euro and the renminbi as its key likely pillars. This shift corresponds to the long-term evolution of the balance of economic weight in the world economy. Such an evolution may mitigate some of the flaws of the present (non-) system, such as the rigidity of key exchange rates, the asymmetry of balance-of-payments adjustments or what remains of the Triffin dilemma. However it may exacerbate other problems, such as short-run exchange rate volatility or the scope for ‘currency wars’, while leaving key questions unresolved, such as the response to capital flows global liquidity provision. Hence, in itself, a multipolar regime can be both the best and the worst of all regimes. Which of these alternatives will materialise depends on the degree of cooperation within a multilateral framework.

This paper was prepared by Agnès Bénassy-Quéré and Jean Pisani-Ferry for the French Conseil d’Analyse Economique and previously published as CEPII (Centre d’études prospectives et d’informations internationales) Working Paper No 2011-4b.

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Concrete Steps toward Realistic Reforms of the International Monetary System

Governor of the People’s Bank of China Zhou Xiaochuan’s famous 2009 paper awakened the debate on the international monetary system from a three-decade long state of apathy. In the run-up to the 2011 French presidency of the G-20, many ideas have been floated about reforming the international monetary system, through reports, papers and conferences. These contributions have especially pointed out the deficiencies of the present system: dependence on a key reserve currency, which in turn leads to asymmetries in the process of adjustment; inability to provide incentives for surplus countries to adjust; disregard for spillovers effects of national monetary policies and as a result the possible inadequacy of the global monetary stance; the developing and emerging countries’ costly reliance on self-insurance through reserve accumulation; inability to channel net capital flows from low-return, advanced economies to high-return, emerging countries; and large real exchange-rate misalignments, sometimes leading to “currency wars”. Old policy dilemmas, such as that of Triffin, have been revisited and old ideas such as the expanding the role of the special drawing right (SDR) have been intensively discussed.

 

Agnès Bénassy-Quéré Director, Centre d’Etudes Prospectives et d’Informations Internationales

Jean Pisani-Ferry Director, Bruegel; Member, French Prime Minister’s Council of Economic Analysis; Member, European Commission’s Consultative Group of Policy Analysis; Professor, Université de Paris-Dauphine

Yongding Yu Director-General, Institute of World Economics and Politics of the Chinese Academy of Social Sciences

 

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Politique budgétaire : pour une nouvelle approche

Contribution à l’ouvrage Quelles réformes pour sauver l’Etat ?
Sous la direction de Jean-paul Betbèze et Benoît Coeuré
Cercle des économistes /PUF/Descartes, 2011

télécharger le papier Download 201104 Boone-Pisani Politique budgétaire

The Euro, the investors and the governance / L’Euro, les investisseurs et la gouvernance

Tommaso Padoa-Schioppa, this convinced and far-seeing European with his deep interest in economic and financial issues, dedicated a large portion of his life to both the European currency and the management of global monetary affairs. To pay tribute to him, Notre Europe and the Egmont Institute joined together to organise a seminar entitled “The Euro, the investors and the governance”. The seminar, held in Brussels on 4 April 2011 in the presence of some sixty personalities, allowed us to address issues that have been the subject of passionate debate since the global financial crisis first rocked the euro zone.

Overall, Firstly, to conduct a thorough assessment of the project undertaken in 1999, while clearly separating the first nine years from the 2008-2011 period. Secondly, to respond to the doubt financial and monetary specialists have placed upon the future of the euro. What do investors expect from a common European currency? What do they dislike about the current system? Do they have any proposals for reform, be they institutional or technical? Finally, the third objective was to ascertain what type of EU governance will be able to guarantee both euro zone stability and European Union economic and social development (i.e. job creation, competitiveness and purchasing power).
 

This publication, a collection of the speakers’ interventions, draws an outline of possible answers to these fundamental questions.

Michel BARNIER
Peter BOFINGER
Etienne DAVIGNON
Jacques DELORS
Mario DRAGHI
Philippe LAGAYETTE
Mario MONTI
Erik NIELSEN
Jean PISANI-FERRY
Didier REYNDERS
Jean-Claude TRICHET

 

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Et pour les actes en Français ici

Convoy Unraveled: Why U.S. and European Post-Crisis Economic Policies Differ (And What to do About It)

After a coordinated initial response to the global financial crisis in 2008-09, the coordination between the major economies of the EU and the United States has since unraveled. In 2010, policy divergences between the United States and Europe have emerged and they have come to dominate the international discussion on macroeconomic policy priorities.

As often, several competing explanations are on offer. One emphasizes differentiated economic and financial structures as the origin of the dissimilar impacts of a common shock. Another view stresses differences in the policy setup arising from institutional constraints, especially though not only, as a result of the EU’s particular policy set-up. A third one puts the onus on doctrine and ideology, and how that causes different perceptions of the policy challenges and risks faced by policymakers.

This paper proposes five measures that the EU and United States could take together to help regain some form of economic coordination despite these obstacles.

 

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Quel système monétaire international pour une économie mondiale en mutation rapide ?

Un document de travail du CEPII écrit conjointement avec Agnès Bénassy-Quéré en mars 2011. 

Bien que le RMB ne soit pas encore convertible, le régime monétaire international a entamé une transition vers un système plus « multipolaire », dont les piliers pourraient, à terme, être le dollar, le renminbi et l’euro. Cette évolution ne fait qu’accompagner celle des poids respectifs des différents pays et zones dans l’économie mondiale. Elle pourrait gommer certaines imperfections du (non) système monétaire international actuel, comme la rigidité de certains taux de change clés, l’asymétrie des ajustements de balances de paiements ou ce qui demeure du dilemme de Triffin. Elle pourrait cependant exacerber d’autres défauts du système monétaire actuel, tels que la volatilité des taux de change ou le risque de « guerres des monnaies ». Enfin, certaines questions, comme la fourniture de liquidité internationale, resteraient irrésolues. Ainsi, un régime multipolaire peut s’avérer le meilleur comme le pire des systèmes, selon le degré de flexibilité des taux de change qui l’accompagne et selon le degré de coordination multilatérale.

Télécharger le texte intégral.

 

What International Monetary System for a Fast-Changing World Economy?

A working paper of the CEPII writen jointly with Agnès Bénassy-Quéré in March 2011.

Though the renminbi is not yet convertible, the international monetary regime has already started to move towards a 'multipolar' system, with the dollar, the Chinese currency and the euro as its key likely pillars. This shift corresponds to the long-term evolution of the balance of economic weight in the world economy. Such an evolution may mitigate some flaws of the present (non-) system, such as the rigidity of key exchange rates, the asymmetry of balance-of-payments adjustments or what remains of the Triffin dilemma. However it may exacerbate other problems, such as short-run exchange rate volatility or the scope for ‘currency wars’, while leaving key questions unresolved, such as the response to capital flows global liquidity provision. Hence, in itself, a multipolar regime can be both the best and the worst of all regimes. Which of these alternatives will materialise depends on the degree of cooperation within a multilateral framework. 

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Reform of the international monetary system: some concrete steps

Highlights
• Reform of the international monetary system is under discussion after three decades of apathy. However, in the short term, there is little chance of a grand redesign. Nevertheless, concrete steps should be taken.

• First, consensus is needed on exchange rates, capital flows and reserves. This consensus is closer than often assumed, and should be codified in some form of soft law, with provisions for surveillance agreed on.

• Second, financial safety nets must be improved so that countries do not have to self-insure by accumulating reserves. The least difficult route could be a new regime for deciding on Special Drawing Right allocations that would facilitate more frequent use of this instrument.

• Third, a change in the composition of the SDR should be planned for, to strengthen the multilateral framework by including the renminbi. These reforms would be a partial move, and would prepare the ground for further developments.

This paper was prepared for the Brookings Institution’s Think Tank 20 project. Agnès Bénassy-Quéré is Director of CEPII (Centre d'Etudes Prospectives et d'Informations Internationales). Jean Pisani-Ferry is Director of Bruegel. Yu Yongding is President of the China Society of World Economics and Academician, Chinese Academy of Social Sciences (Beijing).

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