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.

In this Center for Geoeconomic Studies Working Paper (an update of their January 2009 paper), Brad W. Setser and Arpana Pandey estimate the true scale of China’s U.S. portfolio and examine how the pace of growth and composition of China’s portfolio have evolved over time.

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.

This Working Paper, a contribution to the aids2031 project, focuses on the future of donor financing for HIV prevention and treatment programs and makes recommendations for what the donor community and national governments can do now to build a foundation that ensures steady, long-term funding for HIV/AIDS and alleviates the impact of future challenges.

In this Policy Options Paper, CFR Senior Fellow Daniel Markey argues that a narrow focus on counterterrorism is insufficient to protect U.S. interests in South Asia and advocates a long-term approach that prioritizes engagement with Pakistan.

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.

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.

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.

Seven years after 9/11, there is still no durable framework for effectively securing the United States against terrorism while also upholding its values. This Working Paper by Daniel B. Prieto calls on President Obama and Congress to engage these issues in a bipartisan fashion and craft comprehensive long-term counterterrorism policies that reaffirm the U.S. commitment to core values; only then will the United States be able to develop the kind of foreign policy necessary to meet the modern terrorist threat.

Though the United States of America faces its toughest budgetary and economic challenges since the Great Depression, it cannot afford to eliminate, or even reduce, its foreign assistance spending. For clear reasons of political influence, national security, global stability, and humanitarian concern the United States must, at a minimum, stay the course in its commitments to global health and development, as well as basic humanitarian relief. In this report, Laurie A. Garrett makes recommendations for the future of foreign aid under a new presidential administration and Congress.

For several years, high oil prices enabled the Gulf Cooperation Council countries to add large sums to their state coffers. Falling oil prices imply that some Gulf countries may need to draw on their depleted funds to cover their import bills. In this Center for Geoeconomic Studies Working Paper, Brad W. Setser and Rachel Ziemba examine the impact of the fall in global equities on the Gulf’s large funds and explore how various oil price scenarios could shape those funds’ future growth.

In this Center for Universal Education Working Paper, Gene B. Sperling argues that there are important design elements of the existing global education architecture—the Education for All Fast Track Initiative—that reflect a promising model for a coordinated, global effort on education that should be built upon. Yet he also finds that a new Global Education Fund must employ serious reforms and have a major rebranding and relaunching moment by heads of state that mobilizes a greater global commitment to more resources and sound program implementation to make significant steps toward achieving quality universal education for the world’s poorest children.

This Center for Preventive Action Working Paper surveys existing approaches to assessing state fragility and failure within the context of development, conflict, and governance. It examines the risk factors that have been identified through systematic inquiry and research with the goal of improving the prospects for successful conflict prevention and management, and argues that the goal of "early warning" relating to state fragility and failure should be more to inform and temper our expectations for policy response than to trigger costly and risky interventions.

Read the chapter contributed by former CFR visiting senior fellow for geoeconomics Jessica LeCroy: "Can Canada Be as Innovative, Competitive, and Entrepreneurial as the United States?"

CFR fellows host a series of discussions on pressing international issues.

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.

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.

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.