Emmanuel Farhi, Matteo Maggiori, 20 December 2017

The US has been leveraging itself in recent decades, piling up public and external debt – a trend that could jeopardise the special position the dollar occupies in the international monetary system. This column argues that the US is risking another ‘Triffin’ event, in the form of a confidence crisis and a run on the dollar. The current situation echoes that of the UK in the 1920s and the US in the 1960s. The crises that ended both episodes marked dramatic turning points in the history of the international monetary system.

Giancarlo Corsetti, Gernot Müller, 18 June 2016

For decades, the UK government has been very careful in ensuring a low-risk status for its public and private debt. This column warns that if the UK opts to leave the EU, uncertainty over the implications of Brexit would put this low-risk status in jeopardy. A depreciation of the pound could well generate an export boom, but this would not compensate for the damage to internal demand and to the UK’s ability to access external financing of its deficits.

Events

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