Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94459
Authors: 
Schnabl, Gunther
Year of Publication: 
2011
Series/Report no.: 
Working Papers on Global Financial Markets 13
Abstract: 
During the 1997/98 Asian crisis and the 2007-2010 world financial and economic crisis, China has proved to be a stabilizer for East Asia and the world. The paper stresses the crucial role of the dollar peg for macroeconomic stability in China. The paper explores the current role of China's nominal exchange rate stabilization as stabilizing factor for China, East Asia and the world economy. Distortions originating in real exchange rate stabilization are identified and are argued to be a risk for global growth perspectives. To prevent further economic and financial turmoil the paper recommends policy coordination between China and the US. The exit from unconventional low interest rate policies in the US combined with the end of real (but not nominal) exchange rate stabilization in China is seen as necessary to stabilize longterm growth in China, East Asia and the US.
Subjects: 
China
dollar peg
structural distortions
international policy coordination
global imbalances
JEL: 
F15
F31
F33
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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