Why delay may be deadly for EMU

Article Abstract:

A delay in planned European monetary union (Emu) would have a major impact on European financial markets. The delay could occur because German economic growth may not be strong enough for Germany to cut its budget deficit enough to meet criteria for Emu. Delay would mean that investors would sell assets denominated in pesetas and lira and buy German assets, which would mean Germany may reduce interest rates to offset the danger of recession. UK assets would rise in value as would pound sterling. This could mean tight fiscal policy would be needed in the UK since higher interest rates would dampen inflation but would also push up the pound further.

Financial markets, Monetary unions

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Caught in the crossfire

Article Abstract:

The Hong Kong dollar is linked to the US dollar, and the forced end of this link would involve a drop in investor optimism about Hong Kong. The Hong Kong dollar has attracted speculative attacks leading to a rise in interbank rates. There are questions about whether the link is viable over the longer term, though it is likely to be maintained in the short term. The economy of Hong Kong is becoming more closely tied to that of China, while the link to the US dollar means that US monetary policy affects that of Hong Kong.

Economic aspects, Economic policy, Hong Kong, Monetary policy, Dollar (Hong Kong)

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Sterling's double surprises

Article Abstract:

Pound sterling has risen in relation to the German mark to levels not seen for nine years, and this has had little impact on the UK economy as a whole. Exports have increased by 6% in volume terms since the start of the rise of the pound, and inflation has been little affected. This is because exporters have cut sterling prices in order not to lose markets, while importers have increased profit margins. The increase in the pound's value is expected to be reversed, which would mean only a temporary imapct on profits.

United Kingdom, Prices and rates, Pound (United Kingdom)

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