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China’s $1.7 trillion hangover

China’s $1.7 trillion hangover

Up to 40% of China’s $1.7 trillion LGFV loans are at high risk of default. What’s a panicking Beijing to do?

June 1998

Which way for the euro?



The initial membership of Emu is decided, as is the board of the European Central Bank (ECB) and the exchange-rate parities for converting Emu participant currencies into the new euro on 1 January 1999.

The noise has been deafening about the interference of politicians in the appointment of the new ECB president. Many observers argue that it indicates that the ECB will not be independent in running Emu monetary policy. But anyone who looks at the personalities on the ECB board should be in no doubt that they will exert their authority pretty quickly. The governing council of Europe's new central bank will resist any attempt at political interference. Its monetary policy decisions will be directed solely at maintaining price stability.

The toughness of the ECB's monetary policy in the weeks after Emu starts is not the problem. The real problem is that low interest rates in the run-up to...


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