Global economic slowdown raises risk of protectionism

Action by governments and central banks around the world has sparked fears of currency and trade wars. Already, the fault lines between the emerging and developed worlds are at risk of being prized further apart. With skirmishes between nations likely to increase market volatility, credit investors need to be on their guard.

“We need a new Bretton Woods,” said France’s president, Nicolas Sarkozy, in the opening speech at the World Economic Forum meeting held in Davos, Switzerland, in January. Sarkozy identified two major flaws in the global economic system: the dominance of the dollar and the tendency of emerging economies to hold down the value of their currencies.

“We cannot have a multi-polar world and a single world currency…we cannot preach free trade and at the same time tolerate monetary dumping,” he told