Nobel-winning economist Christopher Pissarides said yesterday the European Central Bank (ECB) might cause the euro to depreciate by using monetary easing as a short-term measure to lessen the eurozone’s debt burden and help its industry gradually recover.
Even though there is a consensus among economists that strengthening fiscal coordination will ultimately help resolve the eurozone’s debt crisis, Pissarides said it may not do much in the short run, given the levels of debt and the sovereign risks in the region.
“Some of it has already been done [by the ECB], but much more is needed,” Pissarides told a conference in Taipei on the European debt crisis.
Pissarides said the ECB should print more money for buying bonds, helping slow the debt problem in certain eurozone countries.
While a comprehensive policy of buying bonds with new money created by the ECB would spur inflation and the depreciation of the euro, it may help revive the eurozone’s economy as well, Pissarides said.
However, given the strong opposition to inflating internally through the bank’s quantitative easing measure, especially from Germany, Pissarides said temporarily relaxing EU rules on free trade and tax competition could be used as an alternative.
Meanwhile, countries in need, such as Greece and Italy, should be allowed to launch a temporary import levy to generate more tax revenues, while export subsidies would be necessary to help increase the competitiveness of the region’s industry, Pissarides said.
“A combination of an import levy and export subsidy has the same effect as depreciation of the currency,” he said.
Such measures may be against the EU’s rules, but they could be temporary, with the advantage that they would keep all the countries now in the eurozone in the union, which is better in the long term.
“Something drastic is needed,” Pissarides said.
As for the long term, Pissarides said the region’s cooperation could be achieved through the creation of a “Fiscal Policy Council” for Europe. The council should not have executive powers, but should make annual reviews of each member’s fiscal policy, he said.
Pissarides shared the Nobel Prize in Economics last year with Dale Mortensen and Peter Diamond. He is scheduled to speak in Taichung today and leave Taiwan tomorrow.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to