Talk of currency wars is everywhere these days, what with central banks from Japan to
But the real problem is something subtler, said John Lipsky, a former top IMF official and now a distinguished visiting scholar at the Paul H. Nitze School of Advanced International Studies.
"When the crisis erupted, the institutional innovation was the G20 leaders' summit, to bring together leaders not just of the G5 or the G7 or even the G8, but the G20," he told CNBC. "One of the key goals was to produce improved economic performance and policy cooperation. What seems to be happening today is much more everybody for themselves."
That's a problem, Lipsky said, because investors have to operate with a lot less certainty. A lack of cooperation, he said, "creates the risk of what you call currency wars, but let's call it greater potential instability in markets because of worries about incoherence or inconsistency of policies."
In other words, countries are racing to lower interest rates in a bid to stay more competitive than their neighbors, it puts the overall economy at greater risk of disruption.
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"It's important that leaders once again insist on a cooperative approach that will build confidence, not produce conflict," he said.
Lipsky's comments follow on a warning about currency warns earlier in the week from
Be careful out there.