The US has a statutory definition of currency manipulation; while some US economists don't quite agree with the legal definition, nevertheless the topic is fairly widely discussed in the US in technical terms (well among those who comprehend these things). For some US examples see a related question.

What I want to ask here is: what's the German or EU-level take on the topic of the technical definition of currency manipulation? This can arguably be a somewhat broad question, so I'd prefer a top-down approach: whether there are any official definitions used (e.g. in EU or government reports, especially in big countries like Germany) or just some views of well known European institutes or EU economists.

1 Answer 1


The European Union has its currency controlled by the European Central bank whose job it is to identify risks to the Euro and deal with those potential risks. Some policymakers in the United States define controlling inflation or intervening with currency in spite of the market to maintain financial stability or having a central bank weaken its own currency as being currency manipulation. Mario Draghi of the European Central Bank does not see this as currency manipulation and sees applying cuts to the interest rates and/or value of the Euro as fulfilling the mandate of the European Central Bank, not currency manipulation. When President Trump accused the European Union of currency manipulation, Mr. Draghi responded by saying:

We have our remit, we have our mandate . . . defined as [targeting] a rate of inflation close but below 2 per cent over the medium term.

I just said a moment ago we are ready to use all the instruments that are necessary to fulfil this mandate and we can’t target the exchange rate.

Basically, the United States doesn't currently have a strong definition for what currency manipulation is. What one policymaker views as currency manipulation can be viewed by someone else as simple 'balancing of the budget'. Mario Draghi and the bank of the European Union admit to engaging in actions that would, according to the definition of currency manipulation by some US policymakers, count as trying to get an unfair economic advantage such as “further cuts in policy interest rates". To the European Union, however, this is less unfair manipulation and more 'what they should do to maintain the economic stability of the European Union'. As far as I know, the European Union has no official definition for currency manipulation and not all policymakers would see this as currency manipulation.

While there is no central definition, The Economist uses an unofficial standard for judging which nation is most liable for currency manipulation as show in the following graph: The Economist Currency Manipulation Graph

As you can see with this graph, Germany is generally on the low-end when it comes to currency manipulation with Taiwan and Switzerland being generally more manipulative of its economic assets. So even by the standards of The Economist, Germany has not really engaged in currency manipulation.

  • The US fed also has inflation in its mandate. See economics.stackexchange.com/questions/27558/… Jan 23, 2020 at 14:24
  • I know that the United States has inflation in its maintain. However, some policymakers see some mentions of controlling inflation like weakening its own currency to subsidize exports as a form of currency manipulation. Also, like I said, there is no official definition for currency manipulation (investopedia.com/articles/investing/090915/…) so what one person might see as simply balancing the budget or quantitative easing may be seen by another as currency manipulation.
    – Tyler Mc
    Jan 23, 2020 at 14:27
  • I'm not sure Draghi actually admitted to that. Michael Yoshikami (on CNBC) claims so, but he gives no direct quote and it seems to me Draghi said it conditionally. Jan 23, 2020 at 14:33
  • Good point. Edited for a more accurate quote of Draghi about “further cuts in policy interest rates" which is action the European Central Bank might take as well as reiterating that only certain people might see this as currency manipulation because of how vague the definition for currency manipulation is.
    – Tyler Mc
    Jan 23, 2020 at 14:40
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    Also, the EU does not equal the Eurozone. There are countries outside of the Eurozone that are in the EU. Even more of a reason probably for the EU to have some rules, although I suspect the issue is that they're called something else. Jan 23, 2020 at 19:41

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