In 1989, the Asia-Pacific Economic Cooperation forum was established in Shanghai, China. The founding of this organization is sometimes referred to as the Shanghai Accord; see below¹ for further details about APEC. More recently, in 2016, there was talk of another possible Shanghai Accord.
First, let's go back in time a little while, to 1985.
Weakening the U.S. dollar then...
The Plaza Accord is a 1985 agreement signed by then-U.S. Treasury Secretary James Baker and the finance ministers of pre-unification West Germany, Japan, France, the UK and the other G8 countries. The intent was to guide the U.S. dollar lower versus the Japanese yen and German mark.
The Plaza Accord was motivated by the U.S. dollar's sharp appreciation with respect to other countries' currencies. It was put in place in order to jump-start growth while easing the U.S. current-account deficit. This would be accomplished by weakening the U.S. dollar and making U.S.-manufactured goods and services more globally price competitive.
...and now?
The Bank of China (China's central bank) has been under pressure to allow the Chinese yuan to transition to a floating currency. The yuan remains a pegged currency, which is not consistent with participating in a global economy. The International Monetary Fund included the yuan in its basket of global reserve currencies last year (2015 Special Drawing Rights), partly with the assumption that Chinese monetary policy would become more consistent with that of a free market, rather than a centrally-planned economy.
However, the yuan has been weakening against the US dollar.
The fear is that another sharp depreciation of the yuan would send the trade-weighted dollar sharply higher, perhaps even into hyperstrong terrain not seen since 1981 to 1984.
How to inspire household animal spirits
This article in the Wall Street Journal's MarketWatch publication, To stave off currency war, is it time for a coordinated response to the Chinese yuan? conjectured that another accord might secretly take place at the G-20 meeting of central bankers in February 2016, in Shanghai. Instead of paraphrasing, I'll include an excerpt.
