The euro in the 'currency war'

CEPR Policy Insight No 70

Agnès Bénassy-Quéré, Pierre-Olivier Gourinchas, Philippe Martin, Guillaume Plantin

All currencies cannot be weak at the same time – if one currency weakens, at least one other must strengthen. From this unpleasant arithmetic emerges the concept of ‘currency wars’, a mutual and vain race to the monetary bottom. The reality, however, is somewhat more complex.