The end of an overlooked European currency war. CEPS Commentary, 21 January 2015

On January 15th the Swiss National Bank (SNB) abandoned the efforts it had taken since September 2011 to ensure that the Swiss franc/euro exchange rate would not fall below 1.2 Swiss francs per euro. The Swiss franc appreciated immediately by almost 20% (after a temporary overshot of an even larger amount).The justification was that speculative capital flows induced by the euro crisis were driving the Swiss franc above its equilibrium value. Daniel Gros draws some important general lessons in this Commentary from the Swiss case and finds that the move by the SNB to stop its interventions will have an important impact on the euro-area economy.

Global governance, currency and trade: implications of one on the other, common problems and how to address cooperation through law at the international level

How to deal with the impacts of the exchange rate on the trade balance of Brazil? There is not a single answer to such question. In order to find out some legal approaches for this matter, this paper aims to describe and analyze the role of the IMF, WTO and the governments of Brazil and the United States on the currency misalignments, especially the extraterritorial effects of such misalignment on the Brazil’s bilateral trade with the United States. The article concludes that the Currency Swap Agreements and other bilateral solutions may minimize the distortions that the Brazilian balance of payment against the USA is carrying, due to the lack of legal solutions for the problem of the exchange rate misalignments that Brazil is facing.

The threat of "currency wars": A European perspective

The ‘currency war’, as it has become known, has three aspects: 1) the inflexible pegs of undervalued currencies; 2) recent attempts by floating exchange-rate countries to resist currency appreciation; 3) quantitative easing. Europe should primarily be concerned about the first issue, which relates to the renewed debate about the international monetary system. The attempts of floating exchange-rate countries to resist currency appreciation are generally justified while China retains a peg. Quantitative easing cannot be deemed a ‘beggar-thy-neighbour’ policy as long as the Fed’s policy is geared towards price stability. Current US inflationary expectations are at historically low levels. Central banks should come to an agreement about the definition of price stability at a time of deflationary pressures. The euro’s exchange rate has not been greatly impacted by the recent currency war; the euro continues to be overvalued, but less than before.

Devaluation, competitiveness and new business formation in emerging countries

In September 2010, Brazil’s Finance Minister, Guido Mantega, used the term “currency war” with reference to monetary policies implemented by different countries to generate an artificial devaluation of their currency and achieve a cheaper, more competitive domestic economy that may be attractive to foreign investors. Similar cases have been documented since the 1930s Great Depression, when several countries abandoned the gold standard as backing for their currencies. More recently, a large-scale asset purchase by Japan’s Central Bank in 2013 was singled out as a strategy aimed at generating devaluation of the yen. This research uses statistics of new business formation density reported by Doing Business for 30 emerging countries in the period 2004-2011 to evaluate the impact of devaluation measured by the behavior of the real effective exchange rate (REER) on the rate of new business formation (NBF). It is determined how variables associated with competitiveness affect the relationship between devaluation and business formation. Results show that devaluation has a positive effect on NBF in the short term, which gets diluted in the long term. Countries with greater competitiveness have less dependence on devaluation to increase the number of businesses.

A tax on currency transactions as an instrument in the war against poverty

Includes bibliography

The renewed currency of Raúl Prebisch

Includes bibliography

The economic development of post-war France;

Bibliography: p. 599-610.

Dissenters in dock at injustice of war

Review of 'The Trial of the Catonsville Nine', Brisbane Festival / Brisbane Powerhouse, published in The Australian, 28 September 200.

The language of neofeudal corporatism and the war on Iraq

In this paper we argue that the term “capitalism” is no longer useful for understanding the current system of political economic relations in which we live. Rather, we argue that the system can be more usefully characterised as neofeudal corporatism. Using examples drawn from a 300,000 word corpus of public utterances by three political leaders from the “coalition of the willing”— George W. Bush, Tony Blair, and John Howard—we show some defining characteristics of this relatively new system and how they are manifest in political language about the invasion of Iraq.

Air evacuation in war : the role of RAAF nurses undertaking air evacuation of casualties between 1943-1953

Air transportation of Australian casualties in World War II was initially carried out in air ambulances with an accompanying male medical orderly. By late 1943 with the war effort concentrated in the Pacific, Allied military authorities realised that air transport was needed to move the increasing numbers of casualties over longer distances. The Royal Australian Air Force (RAAF) became responsible for air evacuation of Australian casualties and established a formal medical air evacuation system with trained flight teams early in 1944. Specialised Medical Air Evacuation Transport Units (MAETUs) were established whose sole responsibility was undertaking air evacuations of Australian casualties from the forward operational areas back to definitive medical care. Flight teams consisting of a RAAF nursing sister (registered nurse) and a medical orderly carried out the escort duties. These personnel had been specially trained in Australia for their role. Post-WWII, the RAAF Nursing Service was demobilised with a limited number of nurses being retained for the Interim Air Force. Subsequently, those nurses were offered commissions in the Permanent Air Force. Some of the nurses who remained were air evacuation trained and carried out air evacuations both in Australia and as part of the British Commonwealth Occupation Force in Japan. With the outbreak of the Korean War in June 1950, Australia became responsible for the air evacuation of British Commonwealth casualties from Korea to Japan. With a re-organisation of the Australian forces as part of the British Commonwealth forces, RAAF nurses were posted to undertake air evacuation from Korea and back to Australia from Iwakuni, Japan. By 1952, a specialised casualty staging section was established in Seoul and staffed by RAAF nurses from Iwakuni on a rotation basis. The development of the Australian air evacuation system and the role of the flight nurses are not well documented for the period 1943-1953. The aims of this research are three fold and include documenting the origins and development of the air evacuation system from 1943-1953; analysing and documenting the RAAF nurse’s role and exploring whether any influences or lessons remain valid today. A traditional historical methodology of narrative and then analysis was used to inform the flight nurse’s role within the totality of the social system. Evidence was based on primary data sources mainly held in Defence files, the Australian War Memorial or the National Archives of Australia. Interviews with 12 ex-RAAF nurses from both WWII and the Korean War were conducted to provide information where there were gaps in the primary data and to enable exploration of the flight nurses’ role and their contributions in war of the air evacuation of casualties. Finally, this thesis highlights two lessons that remain valid today. The first is that interoperability of air evacuation systems with other nations is a force multiplier when resources are scarce or limited. Second, the pre-flight assessment of patients was essential and ensured that there were no deaths in-flight.

Is there timing ability in currency markets? Evidence from ADR issuances

Is there timing ability in the exchange rate markets? We address this question by examining foreign firms' decisions to issue American Depositary Receipts (ADRs). Specifically, we test whether foreign firms consider currency market conditions in their ADR issuance decisions and, in doing so, display some ability to time their local exchange rate market. We study ADR issuances in the U.S. stock market between 1976 and 2003. We find that foreign firms tend to issue ADRs after their local currency has been abnormally strong against the U.S. dollar and before their local currency becomes abnormally weak. This evidence is statistically significant even after controlling for local and U.S. past and future stock market performance and predicable exchange rate movements. Currency market timing is especially significant i) for value companies, relatively small (yet absolutely large) companies issuing relatively large amounts of ADRs, companies with higher currency exposure, manufacturing companies, and emerging market companies, ii) during currency crises (when mispricings are rife) and after the integration of the issuer's local financial market with the world capital markets, iii) when the ADR issue raises capital for the issuing firm (Level III ADR), and iv) regardless of the identity of the underwriting investment bank. Currency market timing is also economically significant since it translates into total savings for the issuing firms of about $646 million (or 1.86% of the total capital-raising ADR issue volume). In contrast, we find no evidence of currency timing ability in a control sample made of non-capital raising ADRs (Level II ADRs). These findings suggest that some companies may have, at least occasionally, private information about foreign exchange.