| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 Asia Economy


How to use our RSS feed

Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.


Finfacts is Ireland's leading business information site and you are in its business news section.


Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News


Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News




Content Management by interactivetools.com.

News : Global Economy Last Updated: Dec 14, 2010 - 8:36 AM

Central bank governor warns of “death grip” on US dollar; Over 12 countries building reserves at double-digit annual rates
By Finfacts Team
Dec 14, 2010 - 8:31 AM

Email this article
 Printer friendly page

Canada’s central bank governor, Mark Carney, warned on Monday that the “death grip” on the US dollar is “reducing the prospects for rebalancing global demand.”  He said that over 12 countries are now building reserves at double-digit annual rates

In a speech Monday to the Economic Club of Canada in Toronto, Carney said the international monetary system is “sliding towards a massive dollar block,” noting that over a dozen countries are accumulating reserves at double-digit annual rates, and countries representing more than 40% of the US dollar trade weight are now managing their currencies.

China has $2.5trn in foreign reserves  - - at about 50% of its GDP.

The governor said excessive reserve accumulation will prove futile. He said structural changes in the global economy will “yield important adjustments in real exchange rates.”

Last September, Carney warned that unprecedented structural changes in the global economy are straining the international monetary system itself. The integration of one-third of humanity into today's global economy dwarfs the shock experienced when Canada and the United States emerged at the turn of the last century. The global economy is rapidly becoming multi-polar. Emerging-market economies are now the main drivers of commodity prices, they represent almost one-half of the growth in all imports over the past decade, and currently account for about two-thirds of global growth.

He said any monetary system would be fragile in the face of these large, positive forces. There is cause for concern that the current system will repeat the failures of its predecessors.

Such has been the case in recent years and given the scale of the economic miracle, the governor said  it is remarkable that the currencies of the BRICs (Brazil, Russia, India and China) have only appreciated 5% in real terms against the G-7 (biggest industrialised economies) over the past decade.

The Bank of Canada analysed the potential difference between a co-operative path for the global economy based on the G-20 framework and one in which markets forced fiscal adjustment and little else is changed. It estimated a possible shortfall in global economic output of $7trn by 2015.

Carney said on Monday that many emerging economies are approaching limits to non-inflationary growth and the challenges of shadowing US policy are increasing. Without changes in nominal exchange rates, he said the adjustment will come through inflation in emerging economies and disinflation in major economies.

“This more wrenching adjustment has already begun, raising the risk of debt deflation and deficient global demand,” he said. “At a minimum, this dynamic reinforces the low-interest-rate strategies of major advanced economies and may necessitate further rounds of quantitative easing.”

The governor said prolonged periods of unusually low rates can cloud assessment of financial risk, prompt investors to search for higher yields and delay balance-sheet adjustment. He urged market participants to resist complacency and to “constantly reassess risks.”

Related Articles
Related Articles

© Copyright 2010 by Finfacts.com

Top of Page

Global Economy
Latest Headlines
Strong Swiss franc gloom deepens for exporters
Global investors shift focus to China; EM outflows surge to $1tn in 13 months
Global oil glut will continue into 2016
Stable growth momentum in OECD area but slowing expected in China
Prices for major food commodities in July lowest since September 2009
Global manufacturing in July weakest level in two years
US, China and UK lead top 25 target countries for foreign direct investment
Budget surpluses rare in developed countries from 1980s; Italy, France, Greece had none in 60 and 40 years
Singapore, London and Shanghai top cities for new FDI projects in 2014; Dublin in 11th place
Exchange rates shuffle as Dublin ranked 49th most expensive city; Paris at 46; Berlin at 105
Western consumer groups under pressure in China and India
Developing countries facing “structural slowdown” likely to last for years
OECD BEPS Tax Project: Amazon books UK sales in UK; Australia proposes up to 100% in penalties
Emerging Markets Index falls to 12-month low in May as manufacturing contracts
US and world economies slowing in 2015 — OECD
Global manufacturing production rose slightly in May; Trade flows weak
GDP growth in OECD area slowed to 0.3% in the first quarter of 2015
Only one quarter of workers worldwide have stable employment contracts
Automatic Exchange of Tax Information: OECD says countries won't be able to game system
Gates Foundation loses in Swiss family's shares coup
Minimum wage levels in OECD countries
Brent oil benchmark over $68 a barrel - up almost 50% in 2015
Global growth slows and manufacturing dips to 21-month low
Family-controlled firms dominate European business
Top 10 of world’s 250 largest consumer products companies account for 30% of sales
Nine of world's 20 fastest growing economies in Africa
Globalisation maybe stalling as trade growth remains weak
Global growth prospects uneven across major economies says IMF
Emerging markets growth lowest since 2009; Global growth at 30-year average
China's economic rebalancing hitting Latin American economies
New York, London, HK & Singapore top global financial centres index; Dublin recovers
Global growth in modest expansion from low oil prices/ monetary easing says OECD
Composite leading indicators point to positive change in growth momentum in the Eurozone
Global labour market trends portend paradise for some but uncertainty for many workers
Vienna remains top of World Quality of Living Rankings in 2015; Dublin at 34
Zurich and Geneva overtake Singapore to become world's most expensive cities
HSBC Switzerland and Falciani: How it happened
Global economic power to continue shift from advanced economies
Global food price index falls in January; Cereal output set for record
Global debt has risen $57tn or 17% of world GDP since 2007