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Tue 21 May 2019 / Asia Pacific

Renminbi 'weaponisation' talk overblown

A media furore has flared over whether China will dump US Treasury holdings or 'weaponise' the renminbi. The debate is entertaining, but misses the mark. In spite of much rumour and conjecture, in the past China has consistently neither acted to 'dump' or 'weaponise' its Treasuries, nor shown interest in doing so. Instability is anathema to Chinese leaders and portfolio managers. It's contrary to their self-interest. A sell-off could ratchet up US Treasury yields, imposing massive capital losses on Chinese official dollar holdings.

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Wed 15 May 2019 / Asia Pacific

China holds 'moral high ground'

Beijing's response to Washington's tariff increase on Chinese imports has, to date, been relatively mild. If the US were to expand its tariff measures, Beijing is expected to continue to retaliate in a similar reserved fashion. This is because it is difficult for China to respond with equal measures, since the country imports a great deal less from the US than the US does from China. However, this is not the only reason. By responding only mildly, China is able to maintain the moral high ground in this global dispute.

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Tue 14 May 2019 / Middle East

Turkey headed for debt default

Behind Argentina, Turkey has the dubious distinction of having the world's second worst performing currency. President Recep Tayyip Erdoğan's mishandling of his country's currency crisis heightens substantially the probability that Turkey will soon default on its external debt. At the heart of the swooning Turkish lira has been the loss of domestic and foreign investor confidence in the government's ability and willingness to correct the large economic imbalances built up by years of overly easy monetary and fiscal policies.

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Tue 30 Apr 2019 / North America,Global

US Treasury misguided on IMF quotas

The US Treasury's welcome stance on sustaining overall International Monetary Fund resources merits support. But its position on quotas will set back multilateralism, promote regionalism and damage US interests, and should be reversed. The IMF should have a large backstop for emergency systemic situations and when quota resources run low. Some separation resources makes sense. Absent the 'new arrangements to borrow', the IMF would rely on massive bilateral loans, creating conditions for opaque deal-making.

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Mon 29 Apr 2019 / Europe

The fall of German banking

The collapse of merger talks between Deutsche Bank and Commerzbank, the No.1 and No.2 German lenders, marks the latest episode in a 30-year downward spiral of German banks that were once by far Europe's best capitalised financial institutions. Chancellor Angela Merkel and Finance Minister Olaf Scholz will now face pressure from France and other European partners for Berlin to invite European bids for either of its top banks. This could invite strong questioning, especially from France, of Germany's ultimate European goals.

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Wed 10 Apr 2019 / Europe

France, Germany and the future of Europe

Europe continues to be prisoner to a concept of sovereignty developed for its past. Setting European sovereignty against national sovereignty is a mistake that would come at a high price. In the middle are France and Germany. Both are aware that the EU must decide, after the forthcoming elections to the European Parliament, how to face up to the threat of disaggregation. The EU needs institutional capacity-building in the centre, but it also needs member states with their own institutional strength. A new world requires new ideas.

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Tue 9 Apr 2019 / Asia Pacific,Global

Beijing ready to 'China-ise' the West

The West is slowly getting over the idea that China will 'westernise'. The illusion that it is only a matter of time before the population's rising wealth will deprive the Chinese Communist Party of the power it wields is dissipating. China is enjoying growing wealth because the authorities have set loose beneficial market forces. Many western firms have profited from this, and many more crave China's custom. This means Beijing can now take the route of 'China-ising' the West, including by promoting wider use of the renminbi.

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Fri 5 Apr 2019 / Asia Pacific

UK-Singapore ties after Brexit

A panel discussion on 3 April in Singapore, organised by the British Chamber of Commerce, was convened to discuss the probable repercussions of the delay and the implications of Brexit for Asian stakeholders. Speakers at the panel were positive about the future of the Singapore-UK partnership, writes Adam Cotter.

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Tue 2 Apr 2019 / Global

Mood set to be downbeat at IMF meetings

The IMF spring meetings will undoubtedly seek to create a positive buzz around policy-makers. But international co-operation may prove to be in short supply. The US is generating global trade tensions and understandably seen as an unreliable leader and partner. China is fighting off its near-term economic malaise at the same time its growth model is facing rising internal contradictions between the state and markets. An introverted Europe is consumed by its own weaknesses. Behind the curtains, the spring meetings are likely to be a downbeat event.

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Thu 28 Mar 2019 / Global

US proposal may address IMF resources

Behind the scenes in Washington, the US is proposing to double the International Monetary Fund's 'New Arrangements to Borrow', one of the pots from which the Fund draws its overall loanable resources. Under the proposal, IMF quotas will remain unchanged. For Managing Director Christine Lagarde, this would alleviate immediate threats to the Fund's resource base. For European, Japanese and US representatives, it would also postpone the debate about shifts in voting powers to emerging markets.

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