Latest news with #BrettonWoodssystem
Indian Express
5 days ago
- Business
- Indian Express
Knowledge Nugget: G7 Group –– Historical evolution and importance for UPSC
Take a look at the essential concepts, terms, quotes, or phenomena every day and brush up your knowledge. Here's your knowledge nugget for today. (Relevance: International groupings are important for both your prelims and Mains examination. In Prelims, questions have been asked on BRICS and G20. The Group of Seven countries comprises powerful economies that have significant influence worldwide. As the G7 leaders' summit is scheduled later this month, it becomes important for you to develop a comprehensive understanding of this grouping. ) This year marks the 50th anniversary of the first Group of 7 (G7) meeting. Canada is hosting the 2025 G7 Leaders' Summit, which will be held in Kananaskis, Alberta, from June 15 to 17, 2025. Canada has hosted 6 summits to date: 1981, 1988, 1995, 2002, 2010, and 2018. With less than two weeks to go for the start of the G7 Summit, being hosted by Canada in Kananaskis in Alberta from June 15-17, India is still to receive an invitation to the gathering. If the invitation window closes, Delhi's absence at the summit will be the first break since 2019. Barring 2020 when the G7 huddle was cancelled by the US, the host country, Prime Minister Narendra Modi has attended every summit since 2019. 1. The Group of 7 (G7) is an informal group of seven countries that consists of the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom. Together these countries represent 40% of global GDP and 10% of the world's population. 2. It has no legal existence, permanent secretariat or official members. There is no binding impact on policy, and all decisions and commitments made at G7 meetings need to be ratified independently by the governing bodies of member states. 3. History: The G7 originated from a 1973 meeting of finance ministers and central bank governors in Paris, France. This meeting was convened in response to major economic challenges of at time – an oil crisis, rising inflation and collapse of the Bretton Woods system. US Treasury Secretary George Schultz decided that it would be beneficial for the large players on the world stage to coordinate with each other on macroeconomic initiatives. Bretton Woods System 4. Thus, the idea of a forum was born, where major industrialised democracies could coordinate economic policies to address common challenges. The first G7 summit was held in 1975 in Rambouillet, France, bringing together the leaders of France, Germany, the United Kingdom, the United States, Italy and Japan. Canada joined the next year. 5. Since 1977, representatives of the European Economic Community, now the European Union, have also participated. Following the collapse of the Soviet Union in 1991 and a subsequent thaw in relations between the East and West, Russia was also invited to join the group in 1998. Thereafter, the group was named the G8 until 2014, when Russia was expelled for its annexation of Crimea from Ukraine. 6. The presidency of G7 meetings is held by each of the seven countries in turn, each year. The country holding the presidency is responsible for organising and hosting the meeting. This year, Canada is holding the presidency. 7. The G7 summit provides a forum for member countries to discuss shared values and concerns. While it initially focused on international economic policy, in the 1980s, the G7 extended its mandate to include issues related to foreign policy and security as well. 8. Over the years, the G7 has evolved from an economic forum to a platform that aims to address a range of global challenges. Concluding with a communiqué outlining political commitments, the annual summit influences global governance, agenda-setting and decision-making processes. 9. Usually, G7 host countries invite some countries as guest countries or outreach partners. Canada has so far invited Ukraine and Australia. It has not released names of other guest countries. 1. G 15: According to the official website of the IMF, the Group of Fifteen (G15) was established at the Ninth Non-Aligned Summit Meeting in Belgrade, then Yugoslavia, in September 1989. It mainly comprises of countries from Latin America, Africa, and Asia with a common goal of enhanced growth and prosperity. It focuses on cooperation among developing countries in the areas of investment, trade, and technology. The membership of the G15 has since expanded to 17 countries, but the name has remained unchanged. 2. G20: The G20, or the Group of Twenty, is an informal grouping of 19 countries (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, and the United States) and the European Union and African Union. These members represent around 85 per cent of the global GDP, over 75 per cent of global trade, and about two-thirds of the world population. As a forum for international economic cooperation, it plays an important role in shaping and strengthening global architecture and governance on all major international economic issues. 3. G24: The Group of Twenty-Four (G24), originally a chapter of the G77, was established in 1971. They call themselves Like Minded Developing Countries (LMDCs). They coordinate the positions of emerging markets and developing countries on international monetary and development finance issues and to ensure that their interests were adequately represented at international platforms. India is part of the LMDC grouping along with China, Indonesia, Malaysia, Iran, Bangladesh, Sri Lanka, the Philippines and others 4. BRICS: BRICS stands for Brazil, Russia, India, China, and South Africa, the original five members who were large, non-Western economies. In January this year, Indonesia officially joined the BRICS as a full member taking total membership to 10. Egypt, Ethiopia, Iran, and the United Arab Emirates are also part of the bloc. The organisation now represents almost half the world's population and almost one-quarter of the world's economy. Post read question (1) In which one of the following groups are all the four countries members of G20? (UPSC CSE 2020) (a) Argentina, Mexico, South Africa and Turkey (b) Australia, Canada, Malaysia and New Zealand (c) Brazil, Iran, Saudi Arabia and Vietnam (d) Indonesia, Japan, Singapore and South Korea (2) With reference to the G7, consider the following statements: 1. It is a formal grouping of advanced democracies that meets annually to coordinate global economic policy and address other transnational issues.. 2. It comprises of US, Germany, Canada, the UK, Japan, Italy, and France, along with the European Union. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Subscribe to our UPSC newsletter. Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X. 🚨 Click Here to read the UPSC Essentials magazine for May 2025. Share your views and suggestions in the comment box or at Khushboo Kumari is a Deputy Copy Editor with The Indian Express. She has done her graduation and post-graduation in History from the University of Delhi. At The Indian Express, she writes for the UPSC section. She holds experience in UPSC-related content development. You can contact her via email: ... Read More
Yahoo
11-04-2025
- Business
- Yahoo
Analysis-Mighty U.S. dollar feels heat as Trump's tariffs spark trade turmoil
By Rae Wee SINGAPORE (Reuters) - In just a week, the dollar has gone from a safe haven to investors' whipping boy as U.S. President Donald Trump's chaotic tariffs on friend and foe alike undermine decades of trust in the world's reserve currency. The sudden loss of confidence was nowhere more stark than in the Treasury market, which saw the largest weekly increase in borrowing costs since 1982 as offshore funds fled. "The U.S., almost overnight, it seems to have lost its safe-haven attributes," said Ray Attrill, head of FX strategy at National Australia Bank. "There is ... a loss of confidence to some extent ... you're overlaying that with the loss of exceptionalism and the view that in the short-term, at least, it's the U.S. economy that's going to be suffering more than any other from what's happening on the tariff front." The dollar, already on course for its worst year since 2017, on Friday plunged to a decade-low against the Swiss franc and dropped to its weakest level against the euro in more than three years. "The whole premise of the dollar as a reserve currency is being challenged, effectively, by what we've seen since Trump's election," said Attrill. It was the establishment of the Bretton Woods system in 1944 that cemented the greenback's global standing. Post-war planners devised a system built on exchange rate stability and deepening international trade and the dollar remained dominant even after Bretton Woods broke down in the early 1970s. But Trump's recent moves on trade have shaken perceptions. In a matter of days he has imposed hefty tariffs on the world, made an abrupt U-turn on his decision and intensified a trade war with China, throwing into question the reliability of the U.S. administration. Stocks globally have shed trillions of dollars and world markets have gone into a tailspin. "Regardless of how the next 90 days evolve, the U.S.'s international reputation has been eroded," ANZ group chief economist Richard Yetsenga said in a note. "The global economy is in a weaker position than it was before the tariffs." Martin Whetton, head of financial markets strategy at Westpac, said this week's massive shift in U.S. dollar swap spreads, the "sharp flash-crash" move higher in U.S. Treasury yields and the heavy selloff in the dollar showed "a stripping away of the shield of liquidity and safety". "By losing or diminishing credibility as a financial safe haven, the willingness of creditors to lend money to the U.S. is reduced," he said. Things are so bad that the U.S. now has to pay investors more to borrow their money than Italy, Spain or Greece. To be sure, some believe the dollar selloff could be temporary. "Once the uncertainty is more or less gone, the tariff rates are set, there's no back and forth, we'll see the dollar getting stronger again because the eventuality is that the tariffs are set in place and this is the new normal," said Francis Tan, chief strategist for Asia at Indosuez Wealth Management. But even if it does prove short-lived, any erosion of the dollar's standing as a safe-haven is bad news for investors. For those who have piled trillions of dollars into buoyant U.S. markets in recent decades, a sharp dollar fall could result in higher interest rates for longer as price pressures at home persist, which is bad for bonds and equities. Foreigners owned $33 trillion of U.S. debt and stocks at the end of 2024. "The Trump administration's ambitious agenda to reform the international financial system seems almost oblivious to the reality of America's extreme dependence on foreign capital as reflected in its net international investment position," said Chris Wood, global head of equity strategy at Jefferies, in a note.
Yahoo
11-04-2025
- Business
- Yahoo
Analysis-Mighty U.S. dollar feels heat as Trump's tariffs spark trade turmoil
By Rae Wee SINGAPORE (Reuters) - In just a week, the dollar has gone from a safe haven to investors' whipping boy as U.S. President Donald Trump's chaotic tariffs on friend and foe alike undermine decades of trust in the world's reserve currency. The sudden loss of confidence was nowhere more stark than in the Treasury market, which saw the largest weekly increase in borrowing costs since 1982 as offshore funds fled. "The U.S., almost overnight, it seems to have lost its safe-haven attributes," said Ray Attrill, head of FX strategy at National Australia Bank. "There is ... a loss of confidence to some extent ... you're overlaying that with the loss of exceptionalism and the view that in the short-term, at least, it's the U.S. economy that's going to be suffering more than any other from what's happening on the tariff front." The dollar, already on course for its worst year since 2017, on Friday plunged to a decade-low against the Swiss franc and dropped to its weakest level against the euro in more than three years. "The whole premise of the dollar as a reserve currency is being challenged, effectively, by what we've seen since Trump's election," said Attrill. It was the establishment of the Bretton Woods system in 1944 that cemented the greenback's global standing. Post-war planners devised a system built on exchange rate stability and deepening international trade and the dollar remained dominant even after Bretton Woods broke down in the early 1970s. But Trump's recent moves on trade have shaken perceptions. In a matter of days he has imposed hefty tariffs on the world, made an abrupt U-turn on his decision and intensified a trade war with China, throwing into question the reliability of the U.S. administration. Stocks globally have shed trillions of dollars and world markets have gone into a tailspin. "Regardless of how the next 90 days evolve, the U.S.'s international reputation has been eroded," ANZ group chief economist Richard Yetsenga said in a note. "The global economy is in a weaker position than it was before the tariffs." Martin Whetton, head of financial markets strategy at Westpac, said this week's massive shift in U.S. dollar swap spreads, the "sharp flash-crash" move higher in U.S. Treasury yields and the heavy selloff in the dollar showed "a stripping away of the shield of liquidity and safety". "By losing or diminishing credibility as a financial safe haven, the willingness of creditors to lend money to the U.S. is reduced," he said. Things are so bad that the U.S. now has to pay investors more to borrow their money than Italy, Spain or Greece. To be sure, some believe the dollar selloff could be temporary. "Once the uncertainty is more or less gone, the tariff rates are set, there's no back and forth, we'll see the dollar getting stronger again because the eventuality is that the tariffs are set in place and this is the new normal," said Francis Tan, chief strategist for Asia at Indosuez Wealth Management. But even if it does prove short-lived, any erosion of the dollar's standing as a safe-haven is bad news for investors. For those who have piled trillions of dollars into buoyant U.S. markets in recent decades, a sharp dollar fall could result in higher interest rates for longer as price pressures at home persist, which is bad for bonds and equities. Foreigners owned $33 trillion of U.S. debt and stocks at the end of 2024. "The Trump administration's ambitious agenda to reform the international financial system seems almost oblivious to the reality of America's extreme dependence on foreign capital as reflected in its net international investment position," said Chris Wood, global head of equity strategy at Jefferies, in a note. Sign in to access your portfolio
Reuters
11-04-2025
- Business
- Reuters
Mighty U.S. dollar feels heat as Trump's tariffs spark trade turmoil
SINGAPORE, April 11 (Reuters) - In just a week, the dollar has gone from a safe haven to investors' whipping boy as U.S. President Donald Trump's chaotic tariffs on friend and foe alike undermine decades of trust in the world's reserve currency. The sudden loss of confidence was nowhere more stark than in the Treasury market, which saw the largest weekly increase in borrowing costs since 1982 as offshore funds fled. "The U.S., almost overnight, it seems to have lost its safe-haven attributes," said Ray Attrill, head of FX strategy at National Australia Bank. "There is ... a loss of confidence to some extent ... you're overlaying that with the loss of exceptionalism and the view that in the short-term, at least, it's the U.S. economy that's going to be suffering more than any other from what's happening on the tariff front." The dollar, already on course for its worst year since 2017 , on Friday plunged to a decade-low against the Swiss franc and dropped to its weakest level against the euro in more than three years. "The whole premise of the dollar as a reserve currency is being challenged, effectively, by what we've seen since Trump's election," said Attrill. It was the establishment of the Bretton Woods system in 1944 that cemented the greenback's global standing. Post-war planners devised a system built on exchange rate stability and deepening international trade and the dollar remained dominant even after Bretton Woods broke down in the early 1970s. But Trump's recent moves on trade have shaken perceptions. In a matter of days he has imposed hefty tariffs on the world, made an abrupt U-turn on his decision and intensified a trade war with China, throwing into question the reliability of the U.S. administration. Stocks globally have shed trillions of dollars and world markets have gone into a tailspin. "Regardless of how the next 90 days evolve, the U.S.'s international reputation has been eroded," ANZ group chief economist Richard Yetsenga said in a note. "The global economy is in a weaker position than it was before the tariffs." Martin Whetton, head of financial markets strategy at Westpac, said this week's massive shift in U.S. dollar swap spreads, the "sharp flash-crash" move higher in U.S. Treasury yields and the heavy selloff in the dollar showed "a stripping away of the shield of liquidity and safety". "By losing or diminishing credibility as a financial safe haven, the willingness of creditors to lend money to the U.S. is reduced," he said. Things are so bad that the U.S. now has to pay investors more to borrow their money than Italy, Spain or Greece. To be sure, some believe the dollar selloff could be temporary. "Once the uncertainty is more or less gone, the tariff rates are set, there's no back and forth, we'll see the dollar getting stronger again because the eventuality is that the tariffs are set in place and this is the new normal," said Francis Tan, chief strategist for Asia at Indosuez Wealth Management. But even if it does prove short-lived, any erosion of the dollar's standing as a safe-haven is bad news for investors. For those who have piled trillions of dollars into buoyant U.S. markets in recent decades, a sharp dollar fall could result in higher interest rates for longer as price pressures at home persist, which is bad for bonds and equities. Foreigners owned $33 trillion of U.S. debt and stocks at the end of 2024. "The Trump administration's ambitious agenda to reform the international financial system seems almost oblivious to the reality of America's extreme dependence on foreign capital as reflected in its net international investment position," said Chris Wood, global head of equity strategy at Jefferies, in a note.
