The world has "hopefully" gotten through the worst in terms of what some analysts have called "currency wars" — the race among nations to devalue their currencies in order to make exports more competitive — according to Chad P. Bown, senior economist at the World Bank's Development Research Group, Trade and International Integration.
The Federal Reserveand the Bank of England have launched two rounds of asset buying – also known as quantitative easing– since the beginning of the crisis, while the European Central Bankpurchased government bonds on the secondary markets and offered two cheap, three-year loans to commercial banks in the euro zone. All were attempts to kick-start stalled economies.
Some analysts called those measures "the race to the bottom" in foreign exchange rates and said they constituted a new form of protectionism, but Bown disagrees.
"I don't think so, I think governments are definitely worried about balancing a lot of interests," Bown told "Worldwide Exchange," citing difficult domestic economic situations and the need to stimulate economies in order to reduce unemployment.
"By and large, countries have been working very, very well to try to coordinate this sort of activity in ways across trading partners so that things haven't gotten out of control,” he said.
"There was some concern about [currency wars turning into new form of protectionism] but I think the world has hopefully gotten through most of the difficult periods of some of that early phase at least," he said.
Typically, during recessions, there is a rise in protectionism mainly driven by three factors: domestic unemployment rising, exchange rates appreciating sharply, and governments targeting new trade barriers against countries that are shrinking, Bown explained.
But during the current crisis, there were no significant protectionist measures, partly because of decisions by governments not to target trading partners that were going through contraction at home, he added.
"We didn't see anything like the resort to protectionism that we experienced in the 1930s, and it's a really fascinating phenomenon," he said.