At best it is the holiday season when hopes and wishes abound.  It may be as it was for Ebenezer, “an undigested bit of beef, a blot of mustard, a crumb of cheese, a fragment of undone potato.”  At worst it is spiked eggnog and the peppermint schnapps.  

How else could reasonable people, like former ECB President Trichet, say that there is a “window of opportunity” for a new agreement on foreign exchange among the major high-income countries?  Other economists go further to fancifully include China too in a new global accord.

Trichet talks of a conceptual convergence among the countries whose currencies make up the IMF's Special Drawing Right, the dollar, euro, yen, and pound.  He notes that these central banks have all adopted inflation targets around 2%, adopted similar rules aimed at limiting financial risk, conducts surveys of member banks, and uses similar communication tools, like press conferences.

The adoption of best practices, an evolving process, cannot be confused with coordination. It cannot conceal the fact that upon being hit with a shock (The Great Financial Crisis), there were different policy responses. Those policy responses have produced different economic outcomes. The dramatic moves in the foreign exchange market among  the major currencies reflect this economic divergence.

Even where Trichet sees a common understanding, like the near 2% inflation target, there are significant differences. So much so that on the eve of the financial crisis, during Trichet's presidency, the ECB hiked rates in July 2008, due largely to the inflation implications of $150 a barrel oil. Trichet also led the ECB to hiking rates twice in H1 2011. These were quickly unwound when Draghi replaced Trichet later that year. During both periods, the federal reserve was easing policy.

Note too that the ECB defines its mandate of price stability by targeting near-but-lower-than 2% CPI. The headline rate is noisy; that is to say it is subject to perturbations that create volatility, but are of little durable economic consequence. The Bank of Japan targets core inflation, but its definition of core excludes fresh food, but not energy. The Federal Reserve defines its mandate of price stability as 2% increase in the core personal consumption expenditure deflator.  Its definition of core excludes food and energy.