In this update of estimates of fundamental equilibrium exchange rates (FEERs) for 30 major economies, Cline and Williamson report on changes in disequilibria in exchange markets since March 2009, the date to which their earlier (June 2009) calculations referred. The overvaluation of the dollar...

This policy brief updates Cline and Williamson's estimates of fundamental equilibrium exchange rates (FEERs) to May 2010 using the data to March contained in the April issue of the International Monetary Fund's World Economic Outlook. The IMF's data are updated to May by subsequent exchange rate...

Special Drawing Rights (SDRs), the reserve asset issued by the International Monetary Fund (IMF), have lately reappeared in the news. The G-20 leaders, at their recent meeting in London, endorsed a proposal to issue $250 billion in SDRs to counteract the financial crisis, while the governor of...

More than a dozen countries, including Brazil, China, India, Japan, and Korea, have been intervening in the foreign exchange market to prevent their currencies from appreciating. There are fears that the second dose of quantitative easing in the United States (dubbed QE2) may worsen currency...

The special drawing rights (SDRs)--the International Monetary Fund's unit of account--could emerge as a rival to the US dollar as an international reserve currency. Williamson questions the assertion of Cato Institute's Swaminathan Aiyar that the SDR is not a currency and can never be one and...

The traditional monetary arrangement, in which a country uses and manages a distinct money, has several strong advantages, but countries have increasingly been adopting other arrangements: currency unions, use of another country's currency, and currency boards. Countries entering into a monetary...

Cline and Williamson present estimates of the fundamental equilibrium exchange rates (FEERs) of leading advanced and emerging-market economies: The US dollar remains significantly overvalued against a number of Asian currencies, most prominently the Chinese renminbi and, to a lesser extent, the...

The world economy faces a grave danger from the large imbalances in current account positions. Policymakers should not wait until financial markets force global adjustment. They should initiate a credible, comprehensive adjustment program to reduce the risks of a crisis, which could produce a...

For their own benefit and that of the rest of the world, East Asia should adopt a basket of currencies as the numeraire for their exchange rates instead of the dollar. It would be particularly advantageous to them if they were all to adopt the same basket. Such a basket would prevent variations...

A large measure of consensus exists about the substantive content of successful economic policy reform--macroeconomic discipline, microeconomic liberalization, and participation in the global economy--that is needed for an economy to enter the modern world. There is much less consensus on the...