Dollar question hovers over meeting of top central bankers

A million-dollar question will hang over the world’s top central bankers when they meet in Sintra, Portugal, this week: Is the monetary system centred on the US currency beginning to unravel?

- FRANCESCO CANEPA BALAZS KORANYI

The central bank heads of the United States, the euro zone, Britain, Japan and South Korea will also have a chance to give their views on how global trade tensions and war in the Middle East are affecting the outlook for inflation and growth at the European Central Bank’s annual get-together.

But with inflation seemingly under control in most countries, the much deeper issue likely to permeate their discussions is: Could US President Donald Trump's protectionist and unpredictable economic policies bring an end to the system that has ruled global finance for 80 years?

“Like everybody else, they are struggling to figure out what kind of world we're heading into,’ said BNP Paribas chief economist Isabelle Mateos y Lago,

who will also attend the forum in the picturesque hill town near Lisbon.

“They've probably realised we're not going to get any answers anytime soon. And so the question is: How do you run monetary policy in that kind of environment?”

Investors will hope to get some clues when Fed chair Jerome Powell, ECB President Christine Lagarde and the governors of the central bank of Japan, Britain and South Korea sit down for a panel discussion at the ECB’s Forum on Central Banking tomorrow.