In this paper, original written for the Economic and Monetary Affairs Committee (ECON) of the European Parliament on 30 November as part of the series entitled 'The threat of currency wars: global imbalances and their effects on currencies', Bruegel Fellows Jean Pisani-Ferry and Zsolt Darvas...

The 'currency war', as it has become known, has three aspects: 1) the inflexible pegs of undervalued currencies; 2) recent attempts by floating exchange-rate countries to resist currency appreciation; 3) quantitative easing. Europe should primarily be concerned about the first issue, which...