This newsletter examines how Japan’s yen‑funded sovereign wealth strategy and the Bank of Japan’s unconventional policies underpin the current devalued yen, sustain high public debt, and transmit shocks to global bond markets.

Flexible exchange rates were long seen as a shield against foreign economic shocks and historical evidence confirms they once worked that way. New research suggests that in today’s deeply integrated European economies, that shield has lost its power.

The Exchange Stabilization Fund has long been used as a discretionary tool of U.S. financial statecraft. The proposed dollar swap line to the UAE fits this pattern, extending dollar access as part of a broader geopolitical bargain rather than in response to a genuine liquidity crisis.

The Supreme Court’s landmark decision striking down Trump’s IEEPA tariffs reshapes the legal and economic landscape of US trade policy. The relief though is partial and temporary, as the White House pivots to Section 122, raising new questions about costs for households, fiscal revenues, and global trade partners.

Two recent papers examine the fundamental drivers of currency dominance in the global financial system. The first shows how fiscal capacity and interest rate policies determine whether unipolar or multipolar currency regimes emerge, while the second demonstrates how competition for safe asset provider status shapes which currencies achieve dominance through reputation-building mechanisms.

Recent research reveals that Europe faces growing incentives to reduce its U.S. Treasury holdings, echoing China’s moves as the dollar and Treasurys are losing their traditional “safe haven” status after recent tariff shocks, signaling that confidence in the dollar’s reserve currency role is being actively questioned.

This newsletter explores the contentious “Mar-a-Lago Accord” proposals, dissecting their roots in Trump-era economic policies. Is taxing capital inflows a trade-balancing strategy? Can international coordination address the dollar’s dominance?

How does the dollar-euro exchange rate affect the portfolio allocation of euro-based investors? What are the potential shifts in global currency dominance?

A reallocation of trade and investment flows among countries is taking place. How does the current fragmentation compare to the one during the Cold War? What are the implications for the dollar as a reserve currency?

Are sanctions eroding the dollar’s dominance? The empirical evidence and a theoretical model.