Dollar bears on wrong track, In defence of the ECB, and more
THE WEEKEND REVIEW – OMFIF
10-14 May 2021, Vol.12 Ed.19
Dollar bears on wrong track: At the start of the year, market consensus expected the dollar to decline in 2021. So far, that has proved to be misguided. The dollar strengthened between January and March on the back of stimulus and higher long-term rates. However, the dollar depreciated as longer US rates eased in April. A new wave of rehashed arguments is pointing again to the dollar coming under major pressure. But just as earlier this year, these arguments shouldn’t be overplayed, writes Mark Sobel.
Reserves system puts independence at risk: Many advanced-economy central banks have resigned themselves to a probable elevated level of reserves for the foreseeable future. This exposes them to political repercussions that could endanger their independence. To avoid this, central banks may need to shrink their balance sheets, writes Chris Papadopoullos.
Towards a sustainable Covid-19 recovery in Europe: Alessandra Perrazzelli of Banca d’Italia, Audun Grønn of Norges Bank and Didier Borowski of Amundi join OMFIF’s David Marsh to discuss the economic situation in Europe. They outline inflation expectations, key investment needs and the importance of the EU’s Next Generation Fund in achieving growth in the euro area.
Retail CBDCs: Policy implications and rollout strategies: Central banks around the world have intensified central bank digital currency research and experimentation. Consumer-ready CBDCs have captured global attention with discussion focusing on public-private partnerships. This podcast explores the policy implications of a new form of programmable money and more.
In defence of the ECB: The ECB is not always easy to understand, but the criticism lobbed at the institution is far overdone. It is often accused of having gone too far in its response to times of crisis. But a predicted surge in inflation has not happened. By all reasonable standards, the ECB is doing a tremendous job, writes Holger Schmieding.