As with the Plaza Accord in 1985, when the United States and its major trading partners agreed to coordinate policies to weaken the US dollar, an agreement to address global imbalances emanating from China has become increasingly necessary. Given China’s undervalued currency, the situation simply cannot be sustained indefinitely.
LONDON—In keeping with the adage that history never repeats itself but often rhymes, I suspect that we could soon see developments in international macroeconomic policy for which there are clear precedents. As with the Plaza Accord in 1985, when the United States and four of its major trading partners agreed to coordinate policies to weaken the US dollar, a new agreement to address today’s global imbalances has become increasingly necessary.
