Threat Of Currency War Casts Shadow Over Global Relations

Today, Pascal Lamy who is in charge of overseeing global trade, announced that the ever-growing friction between countries could well result in 1930’s style protectionism.

The tensions are being caused by a difference of opinion surrounding currency handling within countries; whilst a minority of countries are intervening in their own currencies in order to manipulate their own economy, others such as the U.S. agree that this action creates an artificial environment and disrupts global balance.

This saw states restraining trade between each other in order to prevent foreign take-over of domestic markets and companies. Sanctions on imported goods were generally made.

In what Lamy sees as a slippery slope situation, he is concerned that it will develop into a country closing themselves off to another country by raising barriers to imports.

In what has been a monumental effort of restraint from the U.S., the American government have managed to refrain from branding China as manipulators. If this was to happen, the situation might change at a fast rate, with the threat of protectionism being more imminent.

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