Show Notes
The 29th Geneva Report on the World Economy examines three pressures on the international financial system at once: global imbalances, the status of the dollar, and the stability of bond markets. Two of its authors, Valentina Bruno (American University, CEPR) and Cédric Tille (Geneva Graduate Institute, CEPR), tell Tim Phillips why stocks, the dollar and US Treasuries all fell on Liberation Day in April 2025, why that could happen again, and what we should do about it. So is this a rupture, or a transition in the world's financial system? The research behind this episode: Bruno, Valentina, Steven B. Kamin, Angel Ubide, and Cedric Tille. 2026. "Changing Structure and Challenges of the International Financial System: Imbalances, Currencies, and Financial Stability." Geneva Reports on the World Economy 29. Geneva: International Center for Monetary and Banking Studies; Paris and London: CEPR Press. Free to download. To cite this episode: Phillips, Tim, Valentina Bruno, and Ceric Tille. 2026. "The challenges to the international financial system”. VoxTalks Economics (podcast).
About the guests
Valentina Bruno is Professor of Finance at the Kogod School of Business, American University, where she holds the Arlene R. and Robert P. Kogod Eminent Scholar Chair in Finance. She is a Research Fellow of the Centre for Economic Policy Research in the Banking and Corporate Finance programme. Her research spans macroeconomics and finance, with recent work on how the US dollar transmits global financial conditions. She has worked at the World Bank and been a visiting scholar at the Federal Reserve Board. Cédric Tille is Professor of International Economics at the Geneva Graduate Institute, where he heads the Bilateral Assistance and Capacity Building for Central Banks programme. He is a Research Fellow of CEPR in the International Macroeconomics and Finance programme. His research spans financial globalisation, the dynamics of countries' external assets and liabilities, and the currencies used to invoice international trade. He sat on the Bank Council of the Swiss National Bank from 2011 to 2023 and previously worked for nine years at the Federal Reserve Bank of New York. Research cited in this episode
The triple decline of April 2025. After the US announced sweeping tariffs on 2 April 2025, which President Trump called "Liberation Day", US stocks, Treasuries and the dollar fell together. Bruno argues that foreign investors did not sell their US assets; they bought protection against a falling dollar, and that hedging pushed the currency down. Much of their US equity exposure remains unhedged, so a new shock that starts in the US could trigger the same response. Global imbalances. Large and persistent current account surpluses in some countries, mirrored by deficits in others. Imbalances were a major policy topic before 2008, faded after the global financial crisis, and are now back. Tille argues that the headline measures have risen only modestly; the concern is China, whose trade surplus is the largest ever recorded as a share of world GDP. The China shock. Autor, David H., David Dorn, and Gordon H. Hanson. 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States." American Economic Review 103 (6): 2121-2168. Cheap imports from China benefited US consumers as a whole, but the job losses were concentrated in particular industries and places, furniture making among them. Tille uses it to explain why Germany's car workers see the current wave of Chinese competition differently from German consumers. The coordinated policy package. International Monetary Fund. 2026. "2026 External Sector Report: Amid Rising Imbalances, the Case for Rebalancing." The standard prescription is US fiscal consolidation, more consumption in China and more investment in Europe. The report cites IMF estimates that a coordinated package would narrow global imbalances by 0.5% of world GDP over the medium term, compared with a w
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