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Bernanke blasts China for currency manipulation

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AFP PHOTO/Frederic J. BROWN/NEWSCOM

(Read caption) An illustration of Chinese currency 100 yuan notes issued by the People's Bank of China, fronted with an image of former Communist party leader Mao Zedong.







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A ongoing war of words between China and the US over trade and currency escalated Friday in an unusually strong speech by Fed Chairman Ben Bernanke.

The world’s top central banker – not someone normally this direct – mentioned China by name in pointing a finger at those countries that undervalue their currencies in order to boost exports.

Speaking at the European Central Banking Conference in Germany, Mr. Bernanke even blamed China for about half of the $5 trillion in surplus money accumulated worldwide by such offending export-oriented countries.That surplus is causing an imbalance which is – and here’s the jab from the Fed chief – preventing a global economic recovery.

Unless China lets the value of its currency float on world markets, the US will need to take strong measures to boost its own economy. The Fed did just that last week by starting to buy $600 billion in US Treasury bonds, an act known as “quantitative easing” which lowers US interest rates.

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