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Study: Policy Improvements Needed to Avoid Currency Crisis
Policy improvement and cooperation between monetary and fiscal policy is essential in order to avoid a major currency or debt crisis, according to a new academic paper. Written by Richard Preschern, co-founder and chief risk officer at FX Vision, and Friedrich Schneider, a professor at Johannes Kepler University in Austria, the paper argues that the current monetary fiscal policies being enacted by governments and central banks in response to the financial crisis are waning, possibly to the point of becoming counterproductive.  “Today, we generally perceive a decreasing positive effect from loose monetary policy and it’s widely reported that central banks are running out of tools to accommodate various economies,” Preschern tells Profit & Loss. While central banks in many major economies have enacted expansive monetary policies in order to avoid deflation, Preschern and Schneider argue that, “in reality, we currently find ourselves in a disinflationary, if not deflationary, situatio...

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