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Expert Bio
Brad W. Setser is the Whitney Shepardson senior fellow at the Council on Foreign Relations (CFR). His expertise includes global trade and capital flows, financial vulnerability analysis and sovereign debt restructuring. He regularly blogs at Follow the Money.
Setser served as a senior advisor to the United States Trade Representative from 2021 to 2022, where he worked on the resolution of a number of trade disputes. He had previously served as the deputy assistant secretary for international economic analysis in the U.S. Treasury from 2011 to 2015, where he worked on Europe’s financial crisis, currency policy, financial sanctions, commodity shocks, and Puerto Rico’s debt crisis, and as a director for international economics on the staff of the National Economic Council and the National Security Council.
He is the author of Sovereign Wealth and Sovereign Power (CFR, 2008) and the coauthor, with Nouriel Roubini, of Bailouts and Bail-ins: Responding to Financial Crises in Emerging Economies (Peterson Institute, 2004). His work has been published in Foreign Affairs, Finance and Development, Global Governance and Georgetown Journal of International Law, among others.
Setser was a senior fellow at CFR from 2016 to 2020, a fellow from 2007 to 2009, and an international affairs fellow in 2003. He also has been a visiting scholar at the International Monetary Fund. He holds a BA from Harvard University, a masters from Sciences-Po Paris, and an MA and PhD in international relations from Oxford University.
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For other countries that scramble to find resources to repay their debts, it is inconceivable that the United States, which borrows in its own currency at low rates from investors around the world—voluntarily chooses not to pay.
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Turkey is heading for a classic currency crisis. All of its reserves and then some are borrowed.
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Combining an SDR with budget funding is the most efficient way to stretch budgeted dollars (and euros) and increased the global supply of concessional financing.
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State contingent instruments can play a role in debt restructuring agreements, but they shouldn’t be a give-away to investors. There is a compelling case for their use in Zambia—but not in Sri Lanka.
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The IMF's debt sustainability assessments for Zambia and Sri Lanka differ so greatly that it's hard to understand how both emerged from the same institution. Case-by-case only works with some consistency across cases.
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How would an SDR bond work? Could such a bond issue help stretch the World Bank's and safely mobilize billions to fight poverty and finance investments in clean technology in the world's frontier markets?
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The World Bank (and the IMF) should get credit for increasing their lending to the world's poorest countries during the pandemic. But without additional action, net flows to developing economies will fall off a cliff.
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China has discovered, once again, that the best alternative to a U.S. Treasury bond is a U.S. Agency bond...
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The analytics used in the U.S. Treasury's Foreign Exchange Report should be updated to better capture the significant state flows that no longer appear as part of many country's disclosed foreign exchange reserves.
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The rise in Japanese holdings of foreign bonds had an enormous impact on global markets between 2011 and 2020. The markets will now have to adapt to a sustained reduction in Japanese demand.
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China's current balance of payments data doesn't quite make sense. Significant and poorly explained gaps exist between the reported BoP data and the underlying source data. China's economy is so big that data gaps really matter.
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The global balance of payments only adds up if the G-7's geopolitical rivals are also its bankers.
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The IMF reserve metric isn't working: it is failing to differentiate between obviously under-reserved countries like Turkey and Argentina and adequately reserved countries like China.
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Pay attention to banking system's foreign currency exposure to the government ...
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Do not use the IMF’s current account forecast in the Fall 2020 World Economic Outlook (WEO). It is already out of date.
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A recent white paper from Lazard points out that emerging market sovereign bond holdings are often fairly concentrated among a handful of big players. The main impediment to collective action may be less that bond holders are dispersed, and more that a handful of big holders all compete against each other and the benchmark.
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Is China’s surplus with the United States back at a record level? It depends. In China’s data, China’s exports to the United States and its surplus with the United States are at all-time highs. The United States’ import data, however, shows fewer imports from China than China reports exports—which is interesting, because the norm has long been the other way around.
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China’s second quarter balance of payments data points to a significant increase in the foreign asset accumulation of the state banking system. That at least raises the question of whether China’s authorities are resisting pressure on the yuan to appreciate.
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Joe Gagnon and Fred Bergsten have called the years from 2003 to 2013 the decade of manipulation, as a host of Asian countries protected their competitive position of their exporters by intervening massively in the foreign exchange market. Is a new decade of manipulation about to start, as Asian exporters once again try to keep their currencies from rising?
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Global trade imbalances are, once again, largely the result of Chinese and American trade imbalances. China's surplus has increased even as the pandemic has reduced global trade, as has the U.S. deficit.
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If nothing changes, China’s massive trade surplus will soon be an even bigger political and economic issue…as global trade imbalances are once again being made in China.
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Large increases in dollar reserves tend to come during periods of dollar weakness, not periods of dollar strength. That is for a simple reason: many export-heavy countries still intervene heavily in the foreign currency market to try to keep their own currencies from appreciating against the dollar. Until Asia is as willing to float up as it is to float down, the dollar isn't going anywhere as a reserve currency.