Unified Currency Research Articles

GERMAN ACTIONS ON GREEK CRISIS

Beginning of Greece problems was related to the accession to the Euro Zone. It occurred despite Greece did not meet the criteria thanks to the support of Germany and the Bundesbank, which assessed the economies of countries aspiring to a common currency. Lack of credibility for one country could burry the entire project. After entering the euro zone, Greece has significantly increased the reliability and successive governments could continue to fund increasing debt by issuance of bonds, bought mostly by French and German banks. Greek debt problem was exposed by the crisis of 2008. After collapse of the Greek finance European Union was forced to create assistance programs for the country, exceeding 100 billion. The largest cost were beard of course, by the economy of Germany. In the possession of European banks are Greek government bonds worth 52,3 billion dollars. With about 43 percent of this amount corresponds to German institutions, and further 27 percent to French lenders. Thus, Greece's problems transforms into problems of the banking sector in Germany and France, and problems across the EU economy Financial institutions and EU member states have imposed draconian Greek rescue package, which is believed to be a rescue package for the EURO. Germany stresses that loans to Greece, should be based on "market price" because otherwise it would be a form of subsidy, which violates the principle of the euro area. Angela Merkel has been pushing up the leading role of the IMF's "rescue" of Greece, which met with numerous objections. Merkel has been opposing by long time the idea of financing the debt of Greece by other countries, particularly by Germany. Merkel behaved so in fear of her party's election results, because the German taxpayers with an increasing reluctance opposed aid for the Greeks. German minister of economy said, however, that the ejection of Greece from the euro zone is impossible. In consideration to many economists Greeks will not be able to repay their obligations, most Greek bonds which were held by German banks should be written off. Germany has adopted a tough stance towards Greece and its problems with a huge budget deficit, impending bankruptcy of the country. Germany was the biggest beneficiary of the unified currency. Now it's bearing the greatest cost of saving a drowning partner. Billions of euros, which are pumped, are not guided by a means of noble conception of European solidarity, but a pragmatic concern about its banking system.

Characteristic Spatial and Temporal Scales Unify Models of Animal Movement

Animal movements have been modeled with diffusion at large scales and with more detailed movement models at smaller scales. We argue that the biologically relevant behavior of a wide class of movement models can be efficiently summarized with two parameters: the characteristic temporal and spatial scales of movement. We define these scales so that they describe movement behavior both at short scales (through the velocity autocorrelation function) and at long scales (through the diffusion coefficient). We derive these scales for two types of commonly used movement models: the discrete-step correlated random walk, with either constant or random step intervals, and the continuous-time correlated velocity model. For a given set of characteristic scales, the models produce very similar trajectories and encounter rates between moving searchers and stationary targets. Thus, we argue that characteristic scales provide a unifying currency that can be used to parameterize a wide range of ecological phenomena related to movement.

Regional financial integration in the GCC

We investigate the extent of regional financial integration in the member countries of the Gulf Cooperation Council. Interest rate data show that convergence exists and that interest rate differentials are relatively short-lived—especially relative to other unified currency area and comparable to those of the Euro Area post 1999. Equity data using cross-listed stocks confirm that stock markets are fairly integrated compared to other emerging market regions, although price equalization is hampered by market illiquidity. The limited volume data available suggests that intra-GCC capital flows are sizeable.

Is the US Dollar a Suitable Anchor for the Newly Proposed GCC Currency?

Responses of inflation and non-oil output growth from the Gulf Cooperation Council (GCC) countries to monetary policy shocks from the United States (US) were estimated to determine whether there is evidence to support the US Dollar as the anchor for the proposed unified currency. A structural vector autoregression identified with short-run restrictions was employed for each country with Fed funds rate as the US monetary policy instrument, non-oil output growth, and inflation. The main results suggest that for inflation, the GCC countries show synchronised responses to monetary policy shocks from the US which are similar to inflation in the US, and for non-oil output growth, there is no clear indication that US monetary policy can be as effective for the GCC countries as it is domestically. Consequently, importing US monetary policy via a Dollar peg may guarantee only stable inflation for the GCC countries - not necessarily stable non-oil output growth. If the non-oil output response is made conscientiously - and there are concerns over the Dollar's ability to perform its role as a store of value - a basket peg with both the US Dollar and the Euro may be a sound alternative as confirmed by the variance decomposition analysis of our augmented SVAR with a proxy for the European short-term interest rate.

The Exchange Rate Regime of the GCC Monetary Union

The GCC Monetary Union (GMU) will start, according to the deadline set by the Heads of State, by 2010, in little more than a year. This historic achievement will need to be accompanied by a re-assessment of the exchange rate policy that links the currencies of the GCC member states between each other and to the US Dollar. The peg to the US Dollar has constrained the monetary policy independence of GCC countries, and limited the options of Central Banks in addressing the global financial crisis that started in August 2007, in particular contagion and spillover effects on the banking sectors financial markets and the real economy similarly, the lack of monetary policy independence prevented an effective response to the surge in inflation over the period 2003-2008 and has stood in the way of containing the volatility of the real effective exchange rate.This DIFC Economic Note discusses the optimal currency anchor for the GCC countries and the GCC region as an optimal currency area. We argue that by managing exchange rates against a basket of currencies rather than one currency would allow adequate flexibility to tailor monetary policy that can address domestic conditions and withstand external shocks. In discussing the optimality of a currency area, we stress the role of trade, output and price co-movements and linkages with major economies.Our empirical analysis of the trade, output and inflation inter-linkages of the GCC economies with their major trade and economic partners suggests that a common GCC currency should be based on managing a basket of currencies comprising the US Dollar (USD), the Euro (EUR), the Japanese Yen (JPY) and potentially the British Pound (GBP). We calculate the weights of an optimal currency basket which could serve as a more appropriate external anchor for the GCC as a whole. The optimal weights are reported in the table below As a policy recommendation, we propose maintaining the peg of the GCC currencies to the US Dollar until the adoption of a unified currency for the region on January 1, 2010. Then, at the inception of the Gulf Monetary Union, we recommend that the Gulf Common Currency be pegged to a basket of currencies as calculated in this Note, with an intervention band of 5% around the central parity. This intervention band could be progressively widened as the ‘Khaliji’ gains credibility in international markets and the monetary policy framework of the Gulf Central Bank is well understood by the public and tested in its daily operation mechanisms.

Monies of Account and Monetary Transition in China, Twelfth to Fourteenth Centuries

AbstractBetween the twelfth and the fourteenth centuries China’s monetary system shifted from a multiple currency system including paper notes, bronze coin, and uncoined silver to a unified paper currency system established by the Mongol Yuan dynasty. Consequently, China’s longstanding bronze coin standard was replaced by a new money of account denominated in silver. However, silver largely disappeared as a medium of exchange under Yuan rule. Instead, silver units of account were used to denominate paper currency. The monetary policies of the Mongol Yuan state established a silver unit of account that remained the monetary standard throughout China’s late imperial era.

A Unified Currency in ASEAN: Suitability and Constraints

This paper assesses the suitability and constraints of having a unified currency in Association of Southeast Asian Nations (ASEAN) according to the optimum currency area theory and by analyzing the result of symmetry shocks of macroeconomic variables. The paper concludes that although there are many constraints on the adoption of a common currency by ASEAN, but in near future with the formation ASEAN Economic Community by 2015 along with greater political integration would help to act as a foundation ground for having a common currency.

Economic Policies and the Possibilities of Unified GCC Currency

The aim of this study is to identify the extent to which the GCC countries can adopt similar economic policies by the time the GCC unified currency is formed in 2010. Among other convergence standards, we examined the economic structure of the GCC countries to identify similarities and differences. The study finds significant differences between the economic policies of GCC countries. Moreover, the results suggest that the GCC countries need more policy coordination to smooth out their differences thus designing more unified economic policies which would contribute to the establishment of a monetary union.

European Union dalam Hukum Internasional

European Union has developed from just merely economic coooperation into much stronger bond among its Member States to include unified currency and common foreign security principle. Nevertheless the biggest challenge for European Union is its own status the intern ational law, whether it obtains status as an international legal person whilst eventually will enable it to play more influental role in international community such as the formation of international relation. This article will observe this issue by brought up the internal debates on European union status in international law.

European Union dalam Hukum Internasional

European Union has developed from just merely economic coooperation into much stronger bond among its Member States to include unified currency and common foreign security principle. Nevertheless the biggest challenge for European Union is its own status the intern ational law, whether it obtains status as an international legal person whilst eventually will enable it to play more influental role in international community such as the formation of international relation. This article will observe this issue by brought up the internal debates on European union status in international law.

META-X: Generic Software for Metapopulation Viability Analysis

The major tools used to make population viability analyses (PVA) quantitative are stochastic models of population dynamics. Since a specially tailored model cannot be developed for every threatened population, generic models have been designed which can be parameterised and analysed by non-modellers. These generic models compromise on detail so that they can be used for a wide range of species. However, generic models have been criticised because they can be employed without the user being fully aware of the concepts, methods, potentials, and limitations of PVA. Here, we present the conception of a new generic software package for metapopulation viability analysis, META-X. This conception is based on three elements, which take into account the criticism of earlier generic PVA models: (1) comparative simulation experiments; (2) an occupancy-type model structure which ignores details of local population dynamics (these details are integrated in external submodels); and (3) a unifying currency to quantify persistence and viability, the ‘intrinsic mean time to extinction’. The rationale behind these three elements is explained and demonstrated by exemplary applications of META-X in the three fields for which META-X has been designed: teaching, risk assessment in the field, and planning. The conception of META-X is based on the notion that PVA is a tool to deal with rather than to overcome uncertainty. The purpose of PVA is to produce relative, not absolute, assessments of extinction risk which support, but do not supplant, management decisions.

Trade Integration and Business Cycle Synchronization in East Asia

As trade integration deepens in East Asia, closer links among the business cycles of East Asian countries can be expected. Theoretically, however, increased trade could lead to either closer or looser business cycles across trading partners. This paper seeks to understand how the business cycles of 12 Asian economies have been influenced by increased trade among them. It finds that the increasing trade itself is not necessarily associated with an increased synchronization of their business cycles. Intra-industry trade, rather than inter-industry trade or the volume of trade itself, is the major channel through which their business cycles become synchronized. This result has important implications for the prospects for a unified currency in the region.

ユーロ安定に初の試練

The EU is on the verge of revising, or at least making flexible the guiding principle of its unified currency. They are making, I'm afraid, a fatal error of judgement. The remarkable success, so far, of the euro was entirely due to the shift of macro-economic principles, from demand management to monetary targeting.The guiding principle of the single currency, of which the most important is to contain budget deficit within 3% of the GDP, was certainly a kind of straight-jacket to many of the participating countries to the euro. The majority of the 12 participants, including such laggards as Ireland and Greece, managed to endure inflationary and other pressures, inflicted by the “one-size-fits-for-all” measures demanded by the stability and growth pact.Ironically, it is Germany, France and Italy, the 3 largest and central countries of the euro zone, that are now crying for help. It is especially paradoxical that Germany, which has been demanding the strict application of the SGP principles, has now excessive budgetary deficit and is calling for flexibility in their applications.As of the beginning of March, 2003, it is not decided yet whether the SGP should be revised or not, but judging from the report the Commission presented to the Ecofin Council, they are sure to make “flexible interpretations”, if not revisions to the SGP. Are they right? I thnk not.Ms. Kathleen McNamara, Assistant Professor at Princeton, produed a remarkable book on the euro, called “The Currency of Ideas” (1998). Based on the analysis of the world monetary history after the war, including the Bretton Woods system, she concluded that European monetary systems made a great success, because their guiding principles were shifted from Keynesian to Neoliberal theories. In European context, this meant that all the euro participants had virtually abandoned Keynesian demand management policies and converted to the monetarist approach, which the German Bundesbank had pursued since the end of the World War II.World monetary authorities are now facing unprecedented pressures of world-wide deflation. It is understandable that European financial authorities are demanding flexibility in applying the SGP. But we must remind ourselves that in the colossalised economies, demand stimulus rarely works, as is shown by Japanese policies. Euro financial ministers should be patient.Fortunately for the majority of euro-participants, the March Ecofin Council only produced a very short statement on the SPG that it “provides a robust and flexible framework within which any additional strains on public finances will be addressed”. It was reported that Gordon Brown, British Chancellor of Exchequer, had tried to present a plan to make a flexible interpretation to the SGP, but Belgium, Spain, Italy and other small countries prevented the proposal, made in collaboration with France and Germany. The EU might have to endure some period of uncertainty over the euro. But it may turn out to be beneficial to the single currency after all.

On a Common Currency for the GCC Countries

This paper assesses the eventual replacement of the currencies of the GCC countries with a common currency. It concludes that a properly implemented currency union may contribute to enhance economic efficiency in the region, deepen regional integration, and develop its non-oil economy. However, it cautions that a currency union should be seen as only one component of a much broader integration effort. This should include the removal of the distortions that inhibit intraregional trade and investment, agreements on policy frameworks to ensure macroeconomic stability, and further political integration. The paper also addresses the choice of exchange rate arrangement for the unified currency.

Has Europe outgrown its national boundaries?

This paper provides a robust examination of the shift from country to sector as the primary risk driver for large cap European equities. This study differs from many others in that it utilises both cross-sectional and time-series techniques, index and stock-level data, and two sector definitions. Moreover, it examines the effect of the technology sector, a unified currency and capitalisation size on both pan- and continental-European data to affirm the robustness of the findings. Ultimately, it is shown that, with the notable exception of small capitalisation stocks, sector has gained importance over country as Europe has moved toward financial integration and a unified currency. This conclusion is not sensitive to the technology sector, currency, data vendor, modelling technique or sector definition. The paper concludes with a discussion of implications for the investment management community.

Terms of trade shocks and the current account in a unified currency area

AbstractThe recent debate over the European Union's banana import regime that ensued following the World Trade Organization ruling that found it to be illegal, has implications for those developing countries that rely on preferential access to this market. This paper finds that for those territories of the Eastern Caribbean Central Bank monetary union, the terms of trade shocks are not very persistent and have a large temporary component. In addition, the terms of trade shocks had a small impact on the current account. These shocks however had a larger impact on the supply side suggesting price sensitivity of farmers. Copyright © 2001 John Wiley & Sons, Ltd.

LIQUIDITY, PRICES, SEIGNIORAGE, AND THE TRANSITION FROM BARTER TO FIAT MONEY

The government-led transition from barter to fiat money and its possible failure are analyzed in the Kiyotaki-Wright model when prices are determined endogenously by the strategic bargaining process. The transition is shown to be more inflationary as the government becomes less patient and less credible. The possibility of breakdown in fiat money due to uncertainty in the size of government and its patience implies longer transition path and higher expected inflation. An application to the transition from local currencies to currency integration shows that local governments are tempted to issue more currency to extract seigniorage from foreign as well as home agents. As long as the degree of economic integration is sufficiently large, an increasing frequency of trading opportunities implies lower price levels and higher welfare relative to the local currency regime. It is when the two countries are fully integrated that the world economy with the unified currency achieves the highest welfare.

Can European Banks Survive a Unified Currency in a Nationally Segmented Capital Market?

The euro was expected to become a substitute for the U.S. dollar as an international currency. However, compromises made during its creation make it a less than perfect substitute in the medium term. Among these compromises was the application of macro convergence and micro diversity in financial markets and supervision at the national level. This now prevents the creation of a unified capital market and places EU banks at a disadvantage when competing with U.S. banks in global markets. There were also peculiarities in the integration process that led to a single currency in the United States that suggest further institutional changes will be necessary.

Geese, tigers and dragons: convergence and integration of east Asian economies

This paper identifies the new economic force regenerating the East Asian economies in the post‐crisis era. Based on the convergence of five main economic indexes, it reclassifies the ten East Asian entities into four tiers, and highlights the language similarities among the tiers. It also discusses the inter‐ and intra‐regional economic dynamics, and the implications on further regional trade/investment, financial cooperation and monetary integration, such as a possible unifying Asian currency.

Banana price shocks and adjustment within a unified currency area

The paper traces the impact of a shock to banana prices on key macroeconomic variables for the Windward Islands and the Eastern Caribbean Central Bank (ECCB) Monetary Union as a whole. Net foreign assets of Dominica are expected to show the largest decline while those for Grenada the least. The impact on the net foreign assets of the subregion may be mitigated by other foreign exchange inflows. In addition there was little variation in the growth in M1 with the exception of Dominica suggesting money-output neutrality. Government revenues were not adversely affected suggesting that the terms of trade shock may be viewed as being temporary and agents borrow to maintain existing tastes and preferences. This result hinged on the nexus between government revenue and the reliance on trade taxes on imports suggesting some ambiguity in the explanation of the Harberger-Laursen-Meltzer effect.