As economic growth is lacking, policymakers increasingly embrace unconventional instruments in their quest to reignite growth. Competitive devaluations, i.e. public interventions that aim to lower the exchange rate of a currency, are one of the potential instruments for this purpose. Quantitative easing in the US and monetary policy reforms in Japan are already seen by some as forms of competitive devaluations. The fear is, however, that public measures to lower exchange rates could ultimately escalate into a genuine currency war, with repercussions for the worldwide economy. These issues were discussed by the panellists, as well as during a question and answer session with the audience.
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