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Perilous timing for financial deregulation

by Danae Kyriakopoulou in London | Tue 25 Apr 2017

Donald Trump argues that financial regulation is inhibiting US economic growth by restricting banks’ ability to lend to businesses and households. In deregulating the financial system, he hopes to spur domestic lending and make US banks more competitive internationally. But the prospect of hot money flowing into the US makes this a perilous time to overhaul the financial regulations that are meant to curb speculative activity. The result could be a return to the same conditions that preceded the global financial crisis.

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Centre ground holds in France

by David Marsh in Washington | Mon 24 Apr 2017

The centre ground held in France as presidential favourite Emmanuel Macron won an unexpectedly strong lead over far-right leader Marine Le Pen. The confidence-boosting outcome adds a further gloss to a more benign picture of the world economy in recent months. In a first-round result welcome to financial markets and mainstream European politicians, Macron came out on top with around 24% of the vote. The election has dominated conversations in Washington during the spring meetings of the International Monetary Fund and World Bank.

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Setting stability for poll aftermath

by David Marsh in London | Fri 21 Apr 2017

The central banks of France and Germany are laying plans to preserve economic stability in Europe in the possibly turbulent aftermath of the French presidential election. The competition to choose the next incumbent of the Élysée Palace is wide open. Emmanuel Macron, the narrow favourite, would probably exert a calming influence on Berlin-Paris ties. Responding to the worries about stability as well as inconclusive news on inflation, the Bundesbank and the Banque de France appear to have reached an informal compact on monetary policy unity.

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Xi can give Trump history lesson

by Brian Reading in London | Fri 21 Apr 2017

It is in everyone’s interest to avoid a conflict in the Korean peninsula. Reunification is an impossible dream, and a flood of North Korean refugees is the last thing China wants. One must hope Donald Trump shares in this thinking. If left alone, economic hardship and Chinese pressure will result in regime change in North Korea. Hopefully Chinese President Xi Jinping can give Trump a history lesson, so he understands better what is at stake. Washington cannot solve the North Korean problem alone.

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Fed tightens, China responds

by Chen Kang in Singapore | Thu 20 Apr 2017

In mid-2014 capital flows began to move from emerging markets towards the US in anticipation of the Federal Reserve’s interest rate increases, and the dollar began to appreciate against other currencies. To avoid a sharp depreciation of the renminbi, the People’s Bank of China drew down its dollar reserves to meet demand in the foreign exchange market. Actions taken by the Fed have triggered a chain of extraordinary PBoC responses. Additional US rate increases in 2017 are sure to incite yet more extraordinary measures in China.

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UK leader's successful surprises

by David Marsh in London | Wed 19 Apr 2017

By unexpectedly calling an early election for 8 June, Theresa May has every chance of establishing Britain, from 9 June onwards, as an island of relative stability in an otherwise uncertain continent. Unless something catastrophic happens, May in June will swap her present unelected status for the prize mantle of the sole top European leader with sizeable popular backing for her policies. May now has the chance to show that she can turn successive surprises to her advantages. For the time being, at least, it looks like a successful strategy.

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May outwits rivals

by Meghnad Desai in London | Wed 19 Apr 2017

In calling an early general election for 8 June, Theresa May has outwitted all her rivals. The Conservative party is going to enjoy a massive victory, there is no doubt. It is not difficult to predict that the Labour party will suffer a great defeat, perhaps to the benefit of the Liberal Democrats. What matters next is how the contested seats will be distributed between Labour and the Lib Dems, and how the Scottish National Party performs against the Scottish Conservatives. That is where the future will be decided.

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Colombia opportunities

by Ben Robinson in Bogotá | Tue 18 Apr 2017

Until 2008 the northern coast of Colombia was the scene of violent conflicts between paramilitary groups, guerrillas, drug gangs, and government forces. Today, it is a fast-growing tourist destination. The economy’s rapid post-conflict turnaround has been aided by the government’s record for running sustainable fiscal policies and implementing structural reforms. Should Colombia’s current success continue, it is likely to become an increasingly important voice on the world stage.

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G7 right to hold back on Russia, Syria

by Brian Reading in London | Thu 13 Apr 2017

Common sense prevailed on Tuesday when G7 foreign ministers rejected the US- and UK-proposed sanctions on Russia and Syria following the 4 April chemical attack on Khan Shaykhun. Sanctions by themselves would not be enough to convince Vladimir Putin to abandon his strategic relationship with Syrian President Bashar al-Assad. By provoking a US response, Assad has made it harder for Putin to renounce him. The US should learn the lessons of sanctions history – they are rarely effective and have been known to lead to war.

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Improving Asean integration

by National University of Singapore authors | Wed 12 Apr 2017

The Association of Southeast Asian Nations has a combined population of more than 620m, a GDP greater than that of India, and the potential to be an influential economic bloc. To achieve this, member states must share their expertise, embrace digitalisation and commit to change. The launch of the Asean Economic Community in December 2015 incentivised countries like Vietnam to intensify their infrastructure development and improve regulatory transparency as the region moves towards deeper integration.

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