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Upheaval in the global FX regime
Wednesday 05 October 2022
The global FX regime of the last 20 years has been characterised by a distinct pattern of capital flows. At its core, Asian countries (mostly China) recycled their current account surpluses into USD-denominated FX reserves, in order to weaken their domestic currencies and preserve export-led economic models. Within this circuit of interdependence, the US – through its basic balance deficit (i.e. the part of its current account deficit financed by foreign flows into USD cash, Treasuries and other portfolio securities) – provided an essential global public good: the dollars that the rest of the world needed for trade.
To find more, download the Thematic paper – Themes at a glance (EN)
The global FX regime of the last 20 years has been characterised by a distinct pattern of capital flows. At its core, Asian countries (mostly China) recycled their current account surpluses into USD-denominated FX reserves
