from International Institutions and Global Governance Program and Greenberg Center for Geoeconomic Studies

The Future of International Liquidity and the Role of China

October 31, 2011

Report

More on:

China

Monetary Policy

Capital Flows

Overview

Financial crises in the 1930s and 1970s showed the world that economic instability results when demand for international liquidity allows a small number of countries to run up massive debts in their own currencies. Named for the economist who first described the scenario in the 1960s, this “Triffin Paradox” threatens the global financial system again today as demand for reserves has skyrocketed among emerging market economies. In this Center for Geoeconomic Studies Working Paper, produced in association with CFR’s International Institutions and Global Governance program, Professor Alan Taylor considers whether China might play a larger role in stabilizing the world economy by supplying a reserve asset of its own—an internationalized renminbi.

More on:

China

Monetary Policy

Capital Flows

Top Stories on CFR

Kenya

With a divided electoral commission and legal challenges in the works, Kenya’s presidential election is neither the disaster some feared, nor the unambiguous success hoped for by champions of democracy.

Afghanistan

A year after the U.S. withdrawal, half of Afghanistan’s population faces a food emergency, and the Taliban regime acts with cruelty and indifference.

China

China’s response to Speaker Pelosi’s Taiwan visit was an overreaction of choice