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October 2009
Other Report
This Squam Lake Working Group Paper endorses legislation that would give authorities the necessary powers to effect an orderly resolution of large complex financial institutions. As part of this authority, every such institution should be required to create “living wills” that would help authorities address the difficulties that might arise in a resolution.
See more in Financial Crises, Geoeconomics
October 2009
Other Report
In this CGS/IIGG Working Paper, Jeffry A. Frieden reviews the historical record on the political fallout from the unraveling of macroeconomic imbalances. He warns that the coming adjustments may test the capacity of national governments and international institutions to maintain an open international economic order.
See more in Financial Crises, International Finance
September 2009
Other Report
In this Center for Geoeconomic Studies Working Paper, Steven Dunaway argues that the world economy faces the prospect of a prolonged period of slower growth. Other sources of demand need to be found to take up the slack left by slower U.S. growth. However, the prospects for this do not look good, as none of the other major economies appear inclined to make the necessary changes in policies to deal with their imbalances and raise their demand.
See more in Financial Crises, International Finance
July 2009
Other Report
In this Center for Geoeconomic Studies Working Paper, Karen H. Johnson argues that gross financial flows, not net external imbalances, reveal which countries are most critical for global financial stability.
See more in Financial Crises, International Finance
May 2009
Other Report
Financial regulations in almost all countries are designed to ensure the soundness of individual institutions, principally commercial banks, against the risk of loss on their assets. This focus on individual firms ignores critical interactions between institutions and can also cause regulators to overlook important changes in the overall financial system. The solution: One regulatory organization in each country should be responsible for overseeing the health and stability of the overall financial system. This Working Paper, the fourth in the Squam Lake Working Group series distributed by the Center for Geoeconomic Studies, argues that the central bank should be charged with this important new responsibility.
See more in Financial Crises, Geoeconomics
April 2009
Other Report
The scale of financing needed to support the U.S. fiscal deficit—together with the Federal Reserve’s policy of keeping U.S. interest rates low to ward off deflation—has revived concerns about a sudden and sharp depreciation of the U.S. dollar. This Center for Preventive Action Contingency Planning Memorandum by Brad W. Setser examines potential triggers and indicators of such a crisis and posits concrete policy options to limit U.S. vulnerability to the possibility of a plummeting dollar.
See more in United States, Geoeconomics
April 2009
Other Report
This Working Paper, the third in the Squam Lake Working Group series distributed by the Center for Geoeconomic Studies, recommends support for a new regulatory hybrid security that will expedite the recapitalization of distressed financial companies. The new instrument resembles long-term debt in normal times, but converts to equity when the financial system and the issuing bank are both under financial stress. The regulatory hybrid security the authors envision would be transparent, less costly to taxpayers, and more effective than the ad hoc measures taken in the current crisis.
See more in Economics, Financial Crises
April 2009
Other Report
This Working Paper, the second in a series from the Squam Lake Working Group distributed by the Center for Geoeconomic Studies, argues that regulators consider systemic effects when setting bank capital requirements. Everything else the same, capital requirements should be proportionately higher for larger banks, banks that hold more illiquid assets, and banks that finance more of their operations with short-term debt. But capital requirements are not free. When designing capital requirements that address systemic concerns, regulators must weigh the costs such requirements impose on banks during good times against the benefit of having more capital in the financial system when a crisis strikes.
See more in Economics, Financial Crises
February 2009
Other Report
Information about prices and quantities of assets lies at the heart of well-functioning capital markets. In the current financial crisis, it has become clear that many important actors—both firms and regulatory agencies—have not had sufficient information. Distributed by the Center for Geoeconomic Studies, this Working Paper proposes a new regulatory regime for gathering and disseminating financial market information. The authors argue that government regulators need a new infrastructure to collect and analyze adequate information from large (systemically important) financial institutions. This new information framework would bolster the government’s ability to foresee, contain, and, ideally, prevent disruptions to the overall financial services industry.
See more in Economics, Financial Crises, International Finance
July 2008
Other Report
The news that the Doha Round of the World Trade Organization has broken down in Geneva has made many Americans pessimistic about the future of multilateral trade agreements. In this Center for Geoeconomic Studies Working Paper, Douglas A. Irwin makes the case for optimism and argues that the key to advancing the free-trade cause is political leadership of the sort demonstrated by a heroic but near-forgotten figure, the late secretary of state Cordell Hull of Tennessee. Irwin traces Hull’s path through the decades and shows how his legacy lights the way for leaders of both political parties.
See more in United States, Trade
July 2008
Other Report
The sharp run-up in food prices has triggered riots in several countries and threatened to push millions of people below the poverty line. In this Center for Geoeconomic Studies Working Paper, Karen H. Johnson explains the causes and likely future course of food-price inflation, and analyzes the implications for central banks, trade negotiators, and agricultural policy.
See more in Economics, Poverty
May 2008
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In this Center for Geoeconomic Studies Working Paper, Laurie A. Garrett addresses the mistakes in humanitarian food polices and maps out a better way forward.
See more in Global Health, Foreign Aid
April 2008
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Intuition tells us that oil-rich countries are not friendly to the United States, and that entreprenurial—or “smart”—countries are not endowed with oil. In this Center for Geoeconomic Studies Working Paper, the authors find a triangular relationship between oil wealth, entrepreneurial spirit, and friendliness to the United States. They confirm the idea that “oily” countries are not U.S.-friendly, in contrast to smart countries, which are friendly to the United States and do not have oil. The authors conclude that it is in the U.S. interest to support education and economic diversification in petro-states so those states can become more entrepreneurial and friendly.
See more in Geoeconomics
December 2002
Other Report
This authoritative report urges a United States-European Union accord on transatlantic exchange access to jump-start integration of each side’s mammoth securities market. According to the report, written by a leading authority on exchanges and market regulation, such an accord would significantly cut transatlantic trading costs as well as the cost of capital for American and European companies.
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In Money, Markets, and Sovereignty, the authors present a fascinating intellectual history of monetary nationalism from the ancient world to the present and explore why, in its modern incarnation, it represents the single greatest threat to globalization.
In The Closing of the American Border, Edward Alden goes behind the scenes to tell the story of the Bush administration’s struggle to balance security and openness in the wake of the September 11, 2001, terrorist attacks.
In Termites in the Trading System, Jagdish Bhagwati reveals how the rapid spread of preferential trade agreements endangers the world trading system.
In Regional Monetary Integration, Peter B. Kenen poses an important question: Should various country groups follow the lead of the European Monetary Union and form similar full-fledged monetary unions?
In contrast to conventional wisdom, the growth in government spending and heightened regulation during the Great Depression may have done much to slow economic recovery.
In this report, Benn Steil shows that the financial crisis is the inevitable bust of a classic credit boom, and explains how monetary, taxation, and home ownership promotion policy combined with other feaures of the financial system to fuel an unsustainable buildup in debt. He recommends significant reforms to reverse the debt financing bias and make the system more resilient to falls in asset prices.
In order for policymakers to tackle today’s global economic crisis, this report argues, they must go beyond bailouts and stimulus packages and focus on one of the crisis's root causes: imbalances between savings and investment in major countries.
Copyright 2009 by the Council on Foreign Relations. All Rights Reserved.