We are living in turbulent days. The financial crisis of 2008 is not over, especially in advanced economies. With growth still weak, these countries have been adopting extremely expansionary monetary policies, rather than a more balanced mix of monetary and fiscal stimulus. Emerging economies are sustaining the pace of growth, but cannot assume the role of global powerhouses unaided.

Economies that issue reserve currencies are managing international liquidity without a sense of the collective good. They are resorting to undervalued exchange rates to ensure their share of global markets. This wave of unilateral, competitive devaluations creates a vicious cycle that leads to trade and exchange rate protectionism. This has devastating effects for all but especially for developing countries.

The great challenge for the coming years is to address sovereign debt and fiscal imbalances in some countries, without stopping – or reversing – the global recovery.