Financial commentators have been talking about a currency war for more than a year, and the European Central Bank (ECB)'s decision Thursday to launch a 1.1 trillion euro ($1.3 trillion) quantitative easing package marks an intensification of the conflict, experts say.
Indeed, the euro dropped to an 11-year low of $1.1319 Thursday afternoon after the announcement.
"So far it is a war, but it's being played like a chess match," Cashin, UBS' director of floor operations at the New York Stock Exchange, tells
CNBC.
"That laid-back cerebral attitude is going to disappear. At some point somebody is going to get their currency to a place where it's going to cause enough pain to somebody else, and then it's going to turn into a real war. . . . This currency war cannot go well. They never have."
Cashin doesn't think the ECB's move will accomplish much beyond a weaker euro. "The [package's] reliance on the LTROs [long-term refinancing operations] again is not going to increase bank lending in Europe," he argues.
Meanwhile, one of the world's top economists is very concerned about the state of the global financial system.
"We are in a world that is dangerously unanchored," William White, chairman of the OECD's Review Committee, tells Ambrose Evans-Pritchard, international business editor for
The Daily Telegraph. "We're seeing true currency wars, and everybody is doing it. I have no idea where this is going to end."
The ECB's quantitative easing won't work, he says. "Sovereign bond yields haven't been so low since the 'Black Plague.' How much more bang can you get for your buck?"
With public and private global debt standing at about 20 percent of GDP, "we are holding a tiger by the tail," White notes.
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