Fed vs. ECB

An Unintended War

Mario Draghi ECB Janet Yellen Fed chair DISTORTED Source Reuters 38803762
Calm before the storm? ECB boss Mario Draghi and Fed chief Janet Yellen.
  • Why it matters

    Why it matters

    Uncoordinated monetary policy actions in Europe can hurt economic development in the United States.

  • Facts


    • The Federal Reserve chairwoman, Janet Yellen, is worried about the strong dollar.
    • The dollar has appreciated by 11 percent against the euro in the past three months.
    • The European Central Bank’s €1.1 trillion bond-buying program has caused a depreciation of the euro.
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Not every war that breaks out is really intended. Sometimes both sides simply stumble into each other.

That is also the case in currency wars. In the politics of money, central banks can compete over currency values solely because they look at economic data and react.

This is the danger now facing Europe and the United States.

Last week, Federal Reserve chairwoman Janet Yellen made no secret of the fact that the strong dollar worries her.

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