China’s cheap currency a threat to world economy
source: http://www.chron.com/disp/story.mpl/editorial/outlook/6683632.html
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http://www.chron.com/disp/story.mpl/editorial/outlook/6683632.html
Senior monetary officials usually talk in code. So when Ben Bernanke, the Federal Reserve chairman, spoke recently about Asia, international imbalances and the financial crisis, he didn't specifically criticize China's outrageous currency policy.But he didn't have to: Everyone got the subtext. China's bad behavior is posing a growing threat to the rest of the world economy. The only question now is what the world — and, in particular, the United States — will do about it.
Some background: The value of China's currency, unlike, say, the value of the British pound, isn't determined by supply and demand. Instead, Chinese authorities enforce their target by buying or selling the currency in the foreign exchange market — a policy made possible by restrictions on the ability of private investors to move their money either into or out of the country.
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- China, Money, World Economy, Threat
