Case | HBS Case Collection | March 2013

Currency Wars

by Laura Alfaro and Hilary White


In February 2013, the G-20 finance ministers met in Moscow, Russia to discuss the rising anxieties over a potential international currency war. It was speculated that certain countries were purposely devaluing their currencies in order to improve their competitiveness in global markets. Emerging markets contended that the expansionary monetary policies of the major central banks, such as the US Federal Reserve, European Central Bank, and the Bank of England, were causing significant and detrimental spillover effects, such as currency appreciation, declining exports, and rising inflation, in less developed economies. Conversely, the major central banks insisted that such policies were necessary for reviving economic growth both domestically and internationally. Would these policies successfully create a resurgence of growth? Can expansionary monetary policies be considered "beggar-thy-neighbor" actions by emerging markets? How should developing nations respond?

Keywords: currency; competitiveness; Trade policy; Devaluation; exchange rate; monetary policy; quantitative easing; inflation targeting; capital flows; Central Banking; Currency Exchange Rate; Competitive Strategy; Emerging Markets; Policy; Trade; Conflict and Resolution; Banking Industry; Public Administration Industry; Moscow;


Alfaro, Laura, and Hilary White. "Currency Wars." Harvard Business School Case 713-074, March 2013.