In a vote on Sunday that is likely to have serious repercussion down the road for the eurozone, a Secessionist wave sweeps Belgium
Flemish nationalists made sweeping gains across northern Belgium in local elections on Sunday, a success that will bolster separatists’ hopes for a break-up of the country.
Bart De Wever, leader of the New Flemish Alliance (NVA), is set to become mayor of the northern city of Antwerp, Belgium’s economic heartland, after his party emerged as the largest one ending about 90 years of socialist rule.
Soon after the ballot results emerged, Mr De Wever, who had turned the tough mayoral race into a referendum on Flander’s independence for Belgium, demanded that the country’s prime minister give greater independence to the Dutch-speaking north.
Flanders, which is the most economically prosperous region of Belgium, has long resented financing the ailing economy of French-speaking Wallonia, and Sunday’s victory will strengthen their demand for self-rule.
“De Wever sent a strong signal to Brussels and he has put his party on course to send an even clearer one in 2014 ... they will try to go for an even bigger win in the federal elections,” said Lex Moolenaar, a veteran political analyst for the Gazet Van Antwerpen, the city’s daily.
Fed chairman Ben Bernanke is at odds with Brazil, China, and even the IMF over his policies. Please consider the BBC report Bernanke defends Federal Reserve stimulus measures
Brazil has said US monetary easing to keep interest rates low and weaken the dollar has hurt emerging economies.
And International Monetary Fund chief Christine Lagarde warned on Sunday of consequent asset bubbles developing in emerging nations.
Speaking in Tokyo, where the International Monetary Fund and World Bank are holding annual meetings, Mr Bernanke said: "The linkage between advanced-economy monetary policies and international capital flows is looser than is sometimes asserted."
On Friday, Brazil's finance minister, Guido Mantega, warned that his country would take "whatever measures it deems necessary" to fight the problem.
"Emerging markets can't passively endure large and volatile capital flows and currency fluctuations caused by rich countries' policies," Mr Mantega said in Tokyo.
"Advanced countries cannot count on exporting their way out of the crisis at the expense of emerging-market economies," he said. "Currency wars will only compound the world's economic difficulties."
In a speech at the end of the IMF meeting, Ms Lagarde said: "We have seen several bold initiatives by major central banks certainly that the IMF highly praises and values as major contributing factors to stability."
But she acknowledged that "there are diverging views within and across countries about important issues including the management of capital flows".
She said monetary easing "could strain the capacity of those economies to absorb the potentially large flows and could lead to overheating asset price bubbles.
Although the monetary accommodation we are providing is playing a critical role in supporting the U.S. economy, concerns have been raised about the spillover effects of our policies on our trading partners. In particular, some critics have argued that the Fed's asset purchases, and accommodative monetary policy more generally, encourage capital flows to emerging market economies. These capital flows are said to cause undesirable currency appreciation, too much liquidity leading to asset bubbles or inflation, or economic disruptions as capital inflows quickly give way to outflows.
I am sympathetic to the challenges faced by many economies in a world of volatile international capital flows. And, to be sure, highly accommodative monetary policies in the United States, as well as in other advanced economies, shift interest rate differentials in favor of emerging markets and thus probably contribute to private capital flows to these markets. I would argue, though, that it is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies, for several reasons.
Federal Reserve Chairman Ben Bernanke encouraged policy makers in developing economies to let their currencies appreciate, delivering a strongly worded counterargument to their own critiques of the Fed.
"In some emerging markets, policy makers have chosen to systematically resist currency appreciation as a means of promoting exports and domestic growth," he argued. "However, the perceived benefits of currency management inevitably come with costs, including reduced monetary independence and the consequent susceptibility to imported inflation." Capital surges and inflation in these markets, in other words, are problems that policy makers in these markets could address themselves if they chose to, he argued.
The passage was an apparent shot at authorities in China, who intervene aggressively in foreign-exchange markets to keep their currency closely tied to the dollar, though Mr. Bernanke didn't mention any countries by name.
His comments come as other policy makers have been very critical of the Fed. Brazil's finance minister, Guido Mantega, has accused the Fed of starting a "currency war."
Mr. Bernanke has made similar arguments before, but these were especially pointed and come at a sensitive moment. The Fed in September launched a new bond-buying program that has sparked a new wave of global criticism.
Mr. Bernanke argued that central bankers in developing economies should "refrain from intervening in foreign-exchange markets, thereby allowing the currency to rise."