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27 March 2015

Troubled Waters: Will a Strong Dollar Torpedo the Global Economy?

March 26, 2015

The Plaza Accord was a truly coordinated effort by the G5 economic powers to spur economic growth. Finance ministers met, agreed on a course of action, and executed it. Although the goal was explicit, it was also vague—to devalue the dollar. Now, central banks are coordinating their policy decisions again. But instead of summits and meetings between finance ministers, central banks have a new method to conduct their policy coordination—transparency. Policy transparency from the Federal Reserve allows other central banks to anticipate their actions—and respond accordingly. This is the Yellen Accord—and it may just save Europe.

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