Pleading For A Biosocial Perspective In Criminology Criminology Essay

Pleading For A Biosocial Perspective In Criminology Criminology Essay Criminology traditionally has a multidisciplinary character. However, sociology was the reigning paradigm that dominated the study of crime in the 20th century. Despite of tremendous progress in molecular and behavioral genetics, biological knowledge is not yet implemented in contemporary criminology. The present review therefore takes aim at developing a constructive view on criminal behavior by using an interdisciplinary perspective that encompass both sociological and biological frameworks. First, the current position of biosocial criminology in society will be discussed. Second, possible reasons why the biological paradigm is held outside criminology will be examined. Thereafter the various biological disciplines with their added value to criminology will be described, thereby having a closer look on behavioral genetics. Finally, the review will conclude that biological insights are indispensable while unraveling the etiology of criminal behavior. The crime problem Crime is a major problem for society. In the mid 90-ties the annual cost of crime to each U.S. citizen was more than 4000 dollar (Walsh Ellis, 2004). Crime occurs in different forms by varying from simple shoplifting to very serious offenses like homicide and raping. The heterogeneous nature of criminal behavior makes it difficult to unravel the causes of crime. Historically, the explanation of crime shifted from a devil based view in medieval times into a more scientific view, which is theory driven and multidisciplinary (Ferguson Beaver, 2009). Despite of the multidisciplinary character of criminology, the last few decades there has been a purely environmental approach declaring criminal behavior. Although these environmental approaches offer some explanatory power, a more integrated perspective towards crime is needed for scientific progress (Eliaerts Snacken, 2000). In order to develop a more nuanced and broader approach, there is recently more attention on biological factors in addition to sociological factors while explaining delinquency. However, this biosocial perspective has only a handful of supporters and can count on much criticism from environmental criminologists. In this view, it is remarkable that closely related disciplines such as psychiatry and behavioral genetics have applied the biological paradigm in the explanation of psychopathological behavior for many years now (Moffit, 2005). Research has consistently shown that individual differences in psychopathological behavior are partly due to genetic influences (Boomsma, Busjahn, Peltronen, 2002). Crime is behavior as well and can then be explained as the product of both genetic and environmental variation. Insights in biology are thus indispensable in the explanation of crime (Donker, 2000). The present review therefore takes aim at introducing the biological paradigm to criminology and will discuss why biological explanations are still underexposed in the explanation of crime. Furthermore there will be discussed what the relatively new field of behavioral genetics can add to current criminology. Biosocial criminology Biology is pre-eminently the discipline which made tremendous progress in recent decades. Discoveries in the field of genetics have affected the medical community permanently as well as behavioral geneticists who eagerly build upon the insights of contemporary biology (Delisi, Beaver, Wright Vaughn, 2008). A striking example of this is the Human Genome Project: in which an international group of scientists has identified the genetic makeup of human species by determining the sequence of all the nucleotides in human DNA. Completely contrarian to this development, criminological scholars have held the biological paradigm outside their theories for years. Sociological criminology was the reigning paradigm that dominated the study of crime in the 20th century (Walsh Beaver, 2009). There may be multiple reasons to explain the rigid use of this limited approach. The exclusively environmental approach towards crime is partly due to the fact that criminologists traditionally are trained in a predominantly sociological schooling. These scholars often become specialized in one of the classic sociological approaches explaining criminal behavior such as strain theory (deviation as the result of the mismatch between culturally induced aspirations for economic success and structurally distributed possibilities of achievement) or  ¿Ã‚ ½routine activity ¿Ã‚ ½ theory (focuses on crime opportunities in everyday life such as lack of a guardian), thereby not taking other explanations in consideration (Walsh Ellis, 2004; Gottfredson Hirschi, 1990). Another reason is the reputation of early biological research. Current biological approaches still suffer from the image of the Italian school of Cesare Lombroso in the nineteenth century. Lombroso was an Italian prison doctor who believed that crime was (biologically) caused, not chosen. In his most famous work Criminal Man he postulated that crime was caused by biological defects in inferior  ¿Ã‚ ½atavistic ¿Ã‚ ½ individuals who were  ¿Ã‚ ½throwbacks ¿Ã‚ ½ from an earlier evolutionary stage of human development. Although Lombroso has published a lot about the origins of delinquency, he is recognized and criticized most about his idea of physiognomy: the born criminal could be distinguished by physical characteristics such as large jaws and high cheekbones (Gottfredson Hirschi, 1990). It is this reputation, the not very sophisticated methodology used by early founders of biological theory, which still puts biosocial criminology in a bad light (Walsh Beaver, 2009). Another explanation why biology has become common in related disciplines, but not in criminology could lie in the fact that there is a general fear for genetic determinism among social scientists (Delisi, Beaver, Wright Vaughn, 2008). Biosocial criminology urges a greater philosophical question whether an individual still has freedom to act if his behavior is biologically caused. Opponents argue that free will, as the foundation of our legal system, would be undermined if crime has genetic origins (Levitt Manson, 2007). It is clear that there are legal and ethical issues arising from behavioral genetics and neuroscience and these concerns should be taken into meticulous consideration. In biosocial criminological circles it is widely acknowledged that there are ethical drawbacks to a strict biological approach and the large majority of these authors aim to have a biosocial perspective on crime rather than genetic determinism (Walsh Ellis, 2004). However, sometimes scientific findin gs are erroneously used by the uninitiated. Recently an Italian court has reduced the sentence of a murderer after identifying genes linked to violent behavior (Nature, 2009). It is this type of events which shapes the fear of genetic research. Logically, behavioral geneticists from all over the world have challenged this ruling. Contemporary knowledge in genetics is surely not capable of predicting behavior on an individual level, but only in large population statistics (Boomsma et. al, 2006). Therefore allegations which equate behavioral genetics with genetic determinism are based on irrational fear and should be fought against. The paragraph above mentioned that there are multiple causes for the unpopularity of biosocial criminology. The bad reputation is partly due to an unfounded fear of genetic determinism which in itself is linked to methodological shortcomings of early biological criminologists. Nowadays the methodological tools have become one of the strengths of biology which is, as an exact discipline, characterized by empirical research (Walsh Ellis, 2004). Subsequently, the contemporary zeitgeist seems to be more receptive for further insights and the resistance against biology will gradually diminish (Eliaerts Snacken, 2000). So, if we can overcome the fear for genetics and biological knowledge can be used for criminological purposes, what has this discipline to offer then? There are roughly three biological disciplines relevant to criminology: neuroscience, evolutionary biology and genetics. The basics of neuroscience must become part of every criminologist ¿Ã‚ ½s repertoire since the brain is the place where genetic dispositions and environmental experiences are integrated. Scientific data indicates that self-control, as an important concept in criminology, is housed in the frontal and prefrontal cortex and that it involves a complex, dynamic balancing of limbic and cortical functioning (Wright et al., 2008 ). Neuroscience can thus provide criminology with a solid foundation for, and a more sophisticated understanding of, many of its central elements. Evolutionary biology seeks to understand the adaptive function of a mechanism in terms of its survival and reproductive value. Applied to crime the question would be: what was (and still is) the evolutionary relevant purpose of a criminal act? These kind of ultimate-level  ¿Ã‚ ½why ¿Ã‚ ½ questions can complement genetics because it informs us how the genes of interest came to be present in the first place (Walsh Beaver, 2009). Last but not least, genetics has become a rapidly growing discipline which can be very valuable for criminology. Given the strongly expanding nature of the field of genetics and the potential value it has for criminology, behavioral genetics, as an important player in this field, will be further explored. Behavioral genetics Behavioral genetics is the application of quantitative genetics to the study of human traits and behaviors such as IQ, extraversion and delinquency (Boomsma, Busjahn Peltonen, 2002). This approach can also be used to tackle fundamental criminological issues, such as: to what extent can individual differences (variation) in criminal behavior be explained by genetic influences? Nevertheless, as already been mentioned, crime is a very heterogeneous and abstract concept. In order to decompose this variation (in crime) into a genetic and an environmental part, it is necessary to focus on specific crime related syndromes which can be operationalized. Hence, the present review will focus on aggressive behavior and rule-breaking behavior. Aggressive behavior and rule-breaking behavior are considered as behavioral subtypes of criminal behavior (Ferguson Beaver, 2009). Aggressive behavior in children is an enormous public health problem. Longitudinal research showed that childhood physical aggression is a precursor of being violent in adolescence and beyond (Stattin Magnusson, 1989). Furthermore, aggressive children are at higher risk of alcohol and drug abuse, accidents, violent crimes, suicide attempts and long term unemployment (Kokko Pulkkinen, 2000). Developmental studies have shown that aggressive behavior usually starts at a very young age and remains stable during life (Broidy, Nagin Tremblay, 2003). Likewise, early onset of rule-breaking behavior has proven to be a significant predictor for later delinquency. Krohn et al. reviewed nineteen criminal career studies and found that early onset offenders were forty times more likely to become habitual criminals than late onset offenders. With all of that said, t hese syndromes are highly associated with crime and therefore merit criminological attention. However, what could be the role of behavioral genetics in this? Twin studies and crime Individual differences in aggressive and rule-breaking behavior can be regarded as phenotypic variation. A phenotype is an observable characteristic of a certain trait and is the product of the interaction between the genotype and the environment. The phenotypic variation in these syndromes is therefore composed of two sources, the genes and the environment. Behavioral genetics seeks to understand both the genetic and environmental contributions to individual variations in human behavior. In order to determine the relative contribution of the genes and the environment twin studies are used, since they have genetically informative samples. Twin studies are based on the genetic relatedness between twins and their family members. In the classical twin design the correlation between monozygotic (MZ) twin pairs at a certain phenotype is compared with the correlation between dizygotic (DZ) twin pairs. Since MZ and DZ twins pairs are exposed to the same prenatal and postnatal environment, D Z pairs form the perfect control group of which the agreement between MZ-twin pairs can be compared with. The only difference between MZ and DZ twin pairs is that MZ twins share exactly the same genetic information, whereas DZ twins share on average 50% of their genes. Differences in MZ correlations and DZ correlations can therefore be attributed to genetic influences (Boomsma, Busjahn, Peltronen, 2002). Based on these twin studies heritability estimates can be made (if MZ twins have a higher correlation concerning aggressive and rule-breaking behavior than DZ twins this suggests that individual differences in these syndromes can be explained by genetic factors). Heritability is defined as the extent to which individual differences in genetic makeup contribute to individual differences in observed behavior. Concerning human behavior most of the estimates of heritability are in the range of .30 to .60. A meta-analysis conducted by Miles Carey (1997) showed that 50% of the variance in aggressive behavior could be explained by genetic effects. Subsequently similar heritability estimates have been reported concerning rule-breaking behavior (Bartels et al. 2004a, Bartels et al. 2004b). Twin studies can thus contribute to criminology, because they provide information on the extent to which individual differences in criminal behavior are influenced by genetics. To conclude: individual differences in aggressive and rule-breaking behavior can be partly explained by genetic factors. The high heritability estimates on these crime related syndromes suggest that there is likewise a strong genetic influence on general criminal behavior. Since aggression and rule-breaking behavior are strongly affiliated with criminal behavior, a study of the genetic etiology of these syndromes can ultimately generate fundamental knowledge for criminology. Conclusion Crime has always made its mark on society. For centuries governments have been trying to suppress crime through all kinds of punishment. In this fight it is of utmost importance that intervention strategies are based on reliable scientific knowledge (Donker, 2000). It is therefore desirable that criminology, which is eminently theoretical, will substantiate its rulings with empirical research. Present review has argued for an integrative view on crime whereby aspects of the biological sciences are added to traditionally criminological approaches. Biosocial criminology is not hostile to sociology and merely advocates for a broader, more powerful paradigm that encompass rather than dismiss the social. Any behavior is always the result biological factors interacting with environmental factors . A striking example of this interwoven theory is the gene-interaction effect. Multiple studies showed that child abuse in combination with genetic susceptibility can lead to an increasing risk of depression and even suicide later in life. Studying crime from a biological point of view has been taboo for decades but is now getting visible again, as demonstrated by the theme appeared in 2005: biosocial perspectives in criminology in the Dutch journal of Criminology. Despite this development, important scientific conclusions are often overlooked in policy. The Peoples Party for Freedom and Democracy (VVD), currently[update] the largest political party in the Netherlands , can serve as an example here. While research constantly shows that more severe punishment is not functional, the VVD is calling for stricter penalties, which illustrates that the criminal law has not only to do with efficiency questions, but also has to deal with phenomena like retaliation. In sum, present review believes that the biological sciences have a bounty of treasures to offer criminology. Biosocial criminology will serve as the new paradigm capable of guiding the study of crime in the 21st century, which will be an important intellectual enterprise!

Biodiversity Outline

I. Introduction a. Over the past two decades, strong scientific evidence has emerged showing that loss of the world's biological diversity reduces the productivity and sustainability of natural ecosystems and decreases their ability to provide society with goods and services like food, wood, fodder, fertile soils, and protection from pests and disease. II. Body a. [Amphibians] No group of animals has a higher rate of endangerment than amphibians. Scientists estimate that a third or more of all the roughly 6,300 known species of amphibians are at risk of extinction i.The current amphibian extinction rate may range from 25,039 to 45,474 times the background extinction rate ii. Frogs, toads, and salamanders are disappearing because of habitat loss, water and air pollution, climate change and disease. iii. Because of their sensitivity to environmental changes, vanishing amphibians should be viewed as the canary in the global coal mine, signaling subtle yet radical ecosystem changes that could ultimately claim many other species, including humans. b. [Birds] Birds occur in nearly every habitat on the planet and are often the most visible and familiar wildlife to people across the globe.As such, they provide an important bellwether for tracking changes to the biosphere. Declining bird populations across most to all habitats confirm that profound changes are occurring on our planet in response to human activities. i. A 2009 report on the state of birds in the United States found that 251 (31 percent) of the 800 species in the country are of conservation concern. ii. Globally, BirdLife International estimates that 12 percent of known 9,865 bird species are now considered threatened, with 192 species, or 2 percent, facing an â€Å"extremely high risk† of extinction in the wild — two more species than in 2008. ii. Habitat loss and degradation have caused most of the bird declines, but the impacts of invasive species and capture by collectors play a big role , too. c. [Fish]Increasing demand for water, the damming of rivers throughout the world, the dumping and accumulation of various pollutants, and invasive species make aquatic ecosystems some of the most threatened on the planet; thus, it’s not surprising that there are many fish species that are endangered in both freshwater and marine habitats. i. The American Fisheries Society identified 700 species of freshwater or anadromous fish inNorth America as being imperiled, amounting to 39 percent of all such fish on the continent ii. In North American marine waters, at least 82 fish species are imperiled. Across the globe, 1,851 species of fish — 21 percent of all fish species evaluated — were deemed at risk of extinction by the IUCN in 2010, including more than a third of sharks and rays. d. [Invertebrates (depth into coral reefs)] Invertebrates, from butterflies to mollusks to earthworms to corals, are vastly diverse — and though no one knows just how many invertebrate species exist, they’re estimated to account for about 97 percent of the total species of animals on Earth.Of the 1. 3 million known invertebrate species, the IUCN has evaluated about 9,526 species, with about 30 percent of the species evaluated at risk of extinction. i. Freshwater invertebrates are severely threatened by water pollution, groundwater withdrawal, and water projects, while a large number of invertebrates of notable scientific significance have become either endangered or extinct due to deforestation, especially because of the rapid destruction of tropical rainforests. ii.In the ocean, reef-building corals are declining at an alarming rate: 2008’s first-ever comprehensive global assessment of these animals revealed that a third of reef-building corals are threatened. III. Conclusion a. While much concern over extinction focuses on globally lost species, most of biodiversity’s benefits take place at a local level, and conserving local po pulations is the only way to ensure genetic diversity critical for a species’ long-term survival. Not everything is lucid when it comes to biodiversity loss, but what it is clear that many thousands of species are at risk of disappearing forever in the coming decades.

Socialization is done when children follow the footsteps Essay

Socialization can be referred to as the process by where adults and children learn from each other. It is often said that socialization begins at home and this is true because it is the responsibility of the family to teach children from a very early age the norms and values of society. It is the process by which they learn right from wrong. Socialization is done when children follow the footsteps of their parents, teachers or older siblings. Socialization never really stops because all through life, people learn new things and they are never knowledgeable enough to know everything. During this process of socialization children develop a sense of self and become their own person. They become unique and have a distinct personality. Individuals develop their potential and learn culture through this process of socialization. Humans are unlike any other species and they need to learn things and how to survive. It is important for humans to learn their culture for it is a part of who they are. We learn by internalizing which is the process when people take norms values beliefs and language as their own and accept them as their own. Importance of socialization Socialization is important for many reasons: It helps a person become who they really are. It provides the basics for a person to learn about their culture and their way of behavior. Socialization helps people discover their talents and they find out that they are really good at something and they enjoy that. Through socialization children can develop as a person and acquire normal social graces. Children need to feel cared for and loved so when parents take time out for their children and teach them values and norms this helps them to develop properly. Learn ways on how to think talk and actions that are important for social living Is a way by which the society can pass culture along to the next generation We achieve harmony and are able to it into society We develop skills and learn not to always act on instinct It avoids isolation and improper development of children It allows us to develop our potential to develop or maximize skills We develop proper learning Agents of socialization The family is a major agent of socialization. It gives individuals their first experience, earliest and deepest experience to relationships and their exposure to the way of life. The family also teaches their own about the social and physical environment and teaches them to follow it. Children learn from the type of environment that elders create. The family also gives children a social place when it comes to religion race or culture. This makes up the child’s self-concept. The family are the ones responsible to teach children manners, respect and obedience. They cannot allow their children to go to school without teaching them how to talk to older people with respect or how to obey when told to do something. The school also plays a role in the socialization of children. The school is a port way for children to learn about their ancestors and to teach them of the way people behaved in the older times compared to the way they behave now. They learn how society is connected to race and gender. The school is their first experience to bureaucracy. This means that the school prepares them for the future because it runs on a time schedule and is governed by rules. This is helpful because it prepares them for when they get a job. It is also proven that schools mold children into gender roles. School also open opportunities or children to join peer groups in which they meet people with similar interests or talents. The mass media is also an agent of socialization. The mass media provides a vast amount of information to a huge audience at the same time. It is proven to have a great impact on the behavior and attitude of children. The media is also a port way for people to learn about different cultures and to meet people of different race and ethnicity. The media can inspire people to achieve access and to follow their dreams. Children will view successful people on the television and aspire to be like them. This is a good thing because children will have ambition. Theories on socialization George Herbert Mead: He developed a theory on social behaviorism. It explained how a person’s personality can be affected by social experience. He saw the power that environment had when it came to shaping behavior. He studied inward thinking. His main concept was self. He described this as the part of a person’s personality composed of self- awareness and self- image. He considered that self only develops when people interact with others. He said that humans care what others think of them and that is what they think of themselves as well. Lawrence Kohlberg: He studied how people distinguish between right and wrong. At an early age for children, they think that whatever feel good to them is right. Another aspect of his is that teenagers in the adolescent stage lose their selfishness and learn to act according to what parents tell them and by the rules of their school. He also said that individuals learn not to argue with what is legal or right. Jean Piaget: he studied human cognition. This refers to how people think. He wondered how children made sense of the world. He described the way children made their way through life based on what they thought of it. Piaget believed that biological maturation and increasing social experience was reflected by human behavior. He stated four stages of cognitive development which included sensorimotor, preoperational, concrete operational and formal operational. Sigmund Freud: He studied mental disorder and personality. He believed that biology played a major role in the way people develop. He said that the human personality had three parts which include: The id which represents the innate human drives, this would be the human life and death instincts, the ego which refers to the internalized cultural values and norms and the ego which he considered resolved the competition between the restraints of the superego and the demands of the id. . Family Basic Concepts Family is a group of people who are closely related to each other by blood, adaption or marriage. The family is considered the basic unit of society. A family is considered to be the people who will always be there for you, no matter the situation you are involved in. Whenever in need of something the first place you run to is home. You are confident that there you can be safe and that there will be the people you can depend on. The family is the group of people who play a significant role in an individual’s life. Bonds within a family are considered kinship. Within every society there are families, however the views of people and whom they consider to be their family may vary depending on historical changes and culture. Family of orientation refers to when individuals are born into a family that includes parents and siblings living together. This plays an important role in socialization. A family of procreation is when adults decide to start their own family either naturally or through adaption. Marriage is an important aspect when considering starting a family. Marriage is a legal union between two people who commit to each other and this involves economic cooperation, sexual activity and childbearing. Children born out of marriage are considered to be illegitimate. Global Variations Types of families: Extended family: Is a family that includes more than three generations living in the same household. Everyone is connected by blood. Nuclear family: A family that includes a mother, father and their children living under the same roof. Sibling household: This is a family that an older brother or sister is the one in charge of the rest of children. They are required to be the parents and take care of the younger ones. Reconstituted family: This is a family type formed by the combination of two single- parent families. Single- parent family: Is a family type that involves one parent taking care of the household. Marriage patterns This refers to the way in which individuals are required to marry: Endogamy: This refers to marriage between people of the same social category. This limits marriage prospects to other people of the same gender, social class or race. Exogamy: This is when people of different social class get married. This type of marriage promotes cultural diffusion and builds alliances. Monogamy: This is marriage between two people. Polygamy: This is a type of marriage that unites two or more people. Polygyny: This refers to marriage of one man to two or more women. Polyandry: This refers to marriage of one woman to two or more men. Residential Patterns This talks about where a couple resides after being married: Patrilocality: This pattern refers to when the married couple lives with or close to the husband’s parents or family. Matrilocality: This is when the married couple lives close by or with the wife’s family. Neolocality: This refers to when the married couple live in a new place away from any side of their families. Patterns of Decent This refers to a system families used to trace their kinship over generations. Patrilineal descent: This is when individuals trace their kinship through men. This is when sons are the ones who inherit or get property passed on to them by their fathers. Matrilineal descent: This is a system used to trace kinship through women. This is when mothers pass on property or inheritance to their daughters. Bilateral Descent: in order to promote gender equality, this system traces kinship through both men and women. Theoretical Analysis of the Family Functions of the family Structural and functional analysis: Socialization: The teaching of right from wrong to children. Regulation of sexual activity: Every culture tries to regulate sexual activity in order to maintain property rights and kinship organization. Social Placement: Families try to maintain social organization in order to confer their social identity. Material, emotional and financial security: Families provide financial assistance, physical protection and emotional support. Inequality and the family: Social- Conflict analysis Property and Inheritance: Identifying heirs in order to transmit property. Patriarchy: This is how men own women as their sexual and economic property. Racial and ethnic inequality: Families promote people marry others like themselves. Stages of Family Life This is the way how a family evolves. Courtship: Is when partners get to know each other and see if they are compatible. Settling in: This involves romantic love where partners fall in love with each other and usually plan to marry or not. Child rearing: This is the raising of children on the right path showing them love and kindness. The family in later life: This is when people stay married but for the final years of their marriage they return to living with only one spouse. Transitions and problems in family They are many things that break up the family: Divorce is the dissolution of a marriage. Causes: Individualism is on the rise: This is when family members stop spending as much time with each other. Romantic love often subsides: When sexual passion fades this is when relationships fade. Women are now less dependent on men: Women leave unhappy marriages because wives are now not financially dependent on husbands. Many of today’s marriages are stressful: Most families face the problem of not having enough time or energy for family. Divorce is socially acceptable: Divorce is no longer being discouraged. Legally, a divorce is easier to get: Now divorces are easy to get as long as the couple says the marriage has fail. References Macionis John J., Sociology- (13th Edition). Upper Saddle River, New Jersey: Pearson Prentice Hall, 2009

Exchange rate movements and pegged currencies - Free Essay Example

Sample details Pages: 10 Words: 3147 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? INTRODUCTION Successful money requires both trust in the reliability of its issuer and a reasonable degree of stability in its value (Black, 1985). The US Dollar (hereon USD) replaced the Pound Sterling after World War II as the dominant world currency because of the size of the American economy, its global trade and its developed financial markets. The USD has been the benchmark for other national currencies after the breakdown of the Bretton Woods System in 1972 since then it has been the most important currency of the International Monetary System and no other currencies have so far been able to overtake its standing (Salvatore, 2000). Don’t waste time! Our writers will create an original "Exchange rate movements and pegged currencies" essay for you Create order The Euro was introduced on January 1, 1999, at the value of $1.176. The Euro has become the second most important international currency since its creation; it depreciated drastically against the dollar within one year from its introduction. This report will trace the movements of the USD against the Euro since the introduction of Euro in 1999 to date by explaining its movement during four major trends which are January 1999 to January 2002, February 2002 to December 2004, January 2005 to June 2007 during which it remained more or less stable and it has been highly volatile from beginning of the subprime crisis (mid 2007) till date. The Euro was launched at 1.176 Dollars on the 1st of January, 1999. Many observers and analysts predicted the Euro to appreciate against the USD, but as shown in figure 1, the Euro rose to a maximum of $1.1877 on January 4th and then depreciated by 39% in relative to the Dollar and reached an all time low value of 0.852 Dollar per Euro in October 20 00, which continued till June 2001 leading to an appreciation of the Dollar (Wong Khan, 2006). The depreciating value of the Euro persuaded The European Central Bank (hereon ECB) to raise interest rates seven times during, its borrowing rate from 4.75% to 2.5% and also had interfere in the foreign exchange market four times during November 1999 and October 2000 (Neaime Paschakis, 2002). Several studies have been conducted to explain this movement. The empirical analysis by Corsetti and Pesenti (2000) state that the high growth and interest rates in the US when compared to the Euro zone during the introduction of the Euro lead to an increase in the value of the Dollar relative to the Euro. This can also be supported by Merendith (2001), whose empirical study states that an increase in equity prices in the mid-1990s in US lead to increase in market capitalization in relative to its gross domestic product, increasing both consumption and investment which increased the demand of US D. An increase in demand caused the long term real interest rate to increase sooner than the short term real interest rate, since uncovered interest rate parity is one of the determinants of exchange rate, this lead to an appreciation of Dollar when compared to the Euro. Cohen and Loisel (2001), state that the tight fiscal policy imposed by Maastricht fiscal criteria and a loose monetary policy was also one of the reasons for low interest rate in the Euro zone which lead to the appreciation of the Dollar against the Euro. Neaime and Paschakis (2002) studied the effects on the differences between the US and Euro zone in respect to inflation rates, risk return opportunities, cyclical behaviour and trade and capital flows on the Dollar- Euro exchange rate, their results suggest that the appreciation of dollar from 1999 to 2000 can be explained by the positive shock to aggregate demand in the US during this time period. While Arestis et al (2002) states that, the diversified economic conditions of the Euro member countries lead to a weak economy in the zone due to which the Euro depreciated against the Dollar. But Musa (2001) argued that the weak base of the euro zone was not a reason for the depreciating euro, he stated that it was normal for a new currency to depreciate against the hard currencies such as the USD and Yen. He expected the Euro to become stronger after few years of its inception. The high social security payments, strict employment opportunities and the restrictions on working and opening hours in the Euro zone when compared to the American markets made companies to invest in the US during the introduction of the Euro, which lead to an appreciation of the Dollar (Neaime Paschakis, 2002). This can be supported by Felstein (1997b 2000) who states that euro may remain weak because of the structural rigidities in Europe economies. In this modern world, the more developed economy is likely to attract high return capital investments. The IMF report 2001 states that, the quick growth in the US long term investments such as equities, bonds and direct investments attracted high capital inflow into the US economy which lead to an appreciation in the Dollar value during this period. A study on the balance of payments data shows a rise in direct investment by Euro resident in the US during this time period. This can also be supported by several empirical studies which state that there is a significant relationship between capital inflows and exchange rates. The Dollar started to depreciate against the Euro from February 2002 to December 2004. The US economy lost its attractiveness after the September 11, 2001 terrorist attacks, due to which the stock markets declined, interest rates in the US fell to rates that not have been seen in the past 30 years, increase in US trade deficits and uncertainty about accounting practices. The war in Iraq contributed towards the depreciation of the USD (Mussa, 2005). On February 28, 2002 all national banknotes and coins in the Euro zone were withdrawn from use, this made Euro a store value and an exchange medium. This increased the challenge to the Dollar because in the long run, the Euro might be able to displace the USD and become the international reserve currency (Shams, 2005). Although the dollar was depreciating, its depreciation with the Euro was large when compared to other currencies. In 2004 the dollar dropped by 11% against the Euro while it dropped by only 5% against the Yen, this was because export-oriented Asian countries such as Japan were not prepared to allow their currencies to appreciate against the Dollar due to which European countries have to bear a disproportionate amount of the adjustment burden. This resulted in the dollars share in the foreign exchange market to fall from 94% in 1998 to 89% in 2004 (Carbaugh Hedrick, 2008). The Euro reached a height of 1.36$ in December 2004, caused by the purchasing power parity (PPP) of the euro zone which was 10% to 15% overvalued when compared to the USD. The GDP of the Euro zone was roughly three quarter of the US. All these factors prompted the Euro to become more attractive than the Dollar, which lead to a depreciation of the USD during this period (Mussa, 2005). The Dollar value remained more-or-less stable from the end of 2004 to the beginning of 2007, where the change in the value of dollar against the Euro was very minimal. The inflation rates in the Euro zone and the US was quite similar during this time period. The US current account deficit continued to increase despite the Dollar depreciation during the past few years, which implied the Dollar had to remain in the more-or-less same value against the Euro and depreciate further against the emerging Asian market, with a lesser extent to Japan to overcome this situation (Mussa, 2005). The movement of Dollar against the Euro has been very volatile from the beginning of the subprime crisis till date. Instability of the financial markets, interest rates cuts by the Federal Reserve (Galati Wooldridge, 2006), expansion in the US monetary policy which lead oversupply of dollars, all lead to a strong depreciation in the Dollar value during the second half of 2007 and the beginning of 2008. This also reduced capital investments in the US economy and lead to a deterioration in its store value. Also the euro zone started to grow faster and restore confidence. In 2002 the Euro was worth 86 cents, but by the end of March 2008, it was worth $1.54, the dollars value had dropped by 30% in 3 years (Carbaugh Hedrick, 2008). The crisis spread over the global economy during the second half of 2008.The Dollar was expected to drop rapidly when the Federal Reserve cut down interest rates between September to December 2008, but the reverse occurred and the Dollar appreciated drastically. This was because of the increase in net purchase of US treasuries, which are perceived as highly liquid and riskless compa red to US private securities. Even though the foreign demand for US assets was less during this period, the demand among Americans was high. Americans repatriated capital from abroad which lead to an increase in the demand of dollars when compared to its supply of dollars. The issue of international bonds in USDs for all countries fell by 40% compared to a global drop of international bonds by 15%, which lead to a drop in supply of dollar securities drastically when compared to the global supply of securities. The increase in the demand of the Dollar caused the Dollar to appreciate during this time period (Quere, 2009). The sudden drop in Dollar against the Euro during the last quarter of 2008, was due to the bankruptcy of Lehman Brothers and the government takeover of several other firms. The USD started with a positive note against the Euro in the beginning of 2009 when the US president Barack Obama stated his plans of stimulating economic growth by investing $775 billion over the next 2 years. However the currency movement largely depends on the economic data published by various central banks. This was also supported by the week data published in the Euro zone, such as the cut in interest rates, the drop in manufacturing sector Purchasing Managers Index and the rise in unemployment rates.[1](Currency Market Review) The optimistic view that the U.S Federal Reserve might increase interest rates in the near future and the rising debt levels in Greece which is expecting a helping hand from the ECB, have caused the USD appreciate against the Euro in the beginning of 2010[2]. (Forex Review) CONCLUSION The Dollar appreciated during the initial years after Euros introduction due to high interest and growth rates in the US which favoured high return investments in the US than the Euro zone. This was followed by a three year period where the USD depreciated to the 9/11 attacks and the war in Iraq. The Euro started to stabilize during this time period and its store in value increased. The Dollar began to be more stable after this period, till emergence of the subprime crisis. However, its progress was thwarted by the onset of the subprime crisis which sapped the value of the Dollar to 1.54$ per Euro, caused by interest rate cuts by the Federal Reserve, instability of the US financial markets, loose monetary policy and bankruptcies. After its shaky foray during the early years of the subprime crisis, the Dollar value is starting to regain against the Euro following the economic growth plans proposed by the US president Barack Obama and due to the high debt levels in Greece and an expe ctation of an increase in interest rates in future. However the Dollar value in the future remains to be highly unpredictable. Hong Kong should dismantle its fixed exchange rate peg with the US dollar. Instead it should peg its currency with the Chinese Renminbe (CNY) or allow its currency to float freely. Discuss. INTRODUCTION The Hong Kong Dollar (hereon HKD) is officially linked to the US dollar (hereon USD) at the rate of 7.8 HKDs to one USD. This fixed exchange rate peg with the USD which has been in existence since 17th October 1983, ensures the HKDs stability against major world currencies which is an advantage to Hong Kong. This stability plays an important role in maintaining the external trade in goods and services which is equivalent to around three times its gross domestic product (GDP). The linked exchange system is effective in Hong Kong because of its flexible and responsive economy, the strong and solvent banking system, prudent fiscal policy followed by the government and the large amount of foreign reserves possessed by the country to maintain the link. (Yam, 2005) The Hong Kong Financial Secretary has determined that, the structure of the monetary system shall be characterised by Currency Board Arrangements. As stated by Officer (1989, 1993), currency board is an invention in which t he activities of the market participants determine the exchange rate, instead of depending on the government to manipulate the exchange rate through foreign exchange controls or direct selling of foreign currencies by the central bank. According to Schwartz (1993) and Williamson (1995), A currency board issues cash with 100% foreign exchange reserves backing at a fixed exchange rate against a designated currency. Hong Kong used Silver dollars as legal tender till 1935, and then the HKD was fixed to the British pounds until 1972 and then it was fixed to the USD for the following two years. HKD was allowed to float freely during the time period 1974-1983 and it was re-pegged to the USD in 1983 again. This can be summarized in the following table. This report will discuss and analyse the implications if the Hong Kong Monetary authority decide to dismantle HKDs peg with the USD and re-peg to the Chinese Renminbi or allow it to float freely. The link adopted by Hong Kong has bee n functioning smoothly in the highly volatile market which consisted of the Hong Kong stock market crash in 1987, the 1990 Gulf War, the 1997/1998 Asian financial crisis and the current subprime crisis. The stability of the HKD to external shocks can be shown by the following diagram, Kennedy (2003), summarized that providing a nominal anchor to a monetary policy, encouraging trade and investment, precluding competitive depreciation and avoiding speculative bubbles as the four main advantages of maintaining a fixed exchange rate and he also stated that giving independence to monetary policy, allowing automatic adjustment to trade shocks, retaining seigniorage and lender- of- last- resort capability and avoiding speculative attacks as the four advantages of freely floating exchange rate. As stated by Kennedy (2003), under the linked exchange system followed by Hong Kong, fluctuation in the value USD can cause needless volatility in Honk Kongs international price competitiveness . This can be supported by Chan and Kwan (1998), who stated that the devaluation of the Taiwan Dollar in October, 1997 initiated a series of speculative attacks on the Hong Kong Dollar. Many politicians and economists argued that Hong Kong should give up its peg with the USD as it has already lost its international competitiveness after many years of inflation. Hong Kong also faced many problems in maintaining their peg to the USD, when the dollar appreciated against the Euro and the Yen between the time period 1995-2001.Hong Kongs foreign reserves as at October, 1998 amounted to US$ 8 billion, which was the worlds third largest (Rogoff, 1998) which made it very strong to withstand speculative attacks. At the same time Hong Kong is the only Asian country with a currency board that got through the 1990s successfully. As cited by Tsang (1998), a floating exchange rate regime will cause a considerable amount of instability and uncertainty in a small open economy as Hong Kong because it would not allow for much monetary autonomy. This can also be supported by Hausmann et all (2000) who stated that, the high level of internal flexibility of Hong Kong to absorb external shocks makes it more suitable for a hard peg than a floating exchange regime. As summarized by Rogoff (1998), Hong Kongs ability to support its currency relies on Chinas willingness to put stability on the HKD above all other foreign exchange reserves. As stated by Cheng et all (1999), one of the important goals of Hong Kong, is to become the national financial center of China. The massive capital inflows from China to Hong Kong does not depend only on Hong Kongs legal and financial systems but it is largely because of its peg with the USD which is an international currency. If Hong Kong decides to dismantle its peg and float its currency freely, Hong Kongs attractiveness as Chinas financial center might decline considerably. Suttle and Fernandez (2005) stated that, Hong Kong would have to f ace a big challenge if it dismantles its peg with the USD because it would have to develop an exiting strategy from the USD peg and it would have to develop a full monetary union with China. Therefore if Hong Kong dismantle its peg with the USD and floats it currency freely, it would have to pursue an independent monetary policy which will not have the same clarity and effectiveness as the Linked Exchange Rate System. Re-pegging the HKD with the CNY is one of the most popular theories and a lot of research and arguments have been done on this topic. As stated by Greenwood (2009), In the past it was silver, in the future it may become the Renminbi, but that depends on how quickly China moves to full convertibility. Hong Kong monetary authority has injected more than 25.8 billion USD into the financial system in 2009 to maintain its currency peg with the USD, as funds pour into the city from China, which is the worlds fastest growing economy.[3] As stated by Dean and Eslake (200 7), Hong Kongs economy and financial system is becoming increasingly linked with China, but right now there are too many restrictions in replacing the USD with the CNY because the CNY can be traded only by exporters and importers which means it is only convertible on the current account. Hong Kong would not be able to peg its currency with the CNY unless it becomes fully convertible both on current and capital accounts. This seems to be a long term proposition. If Hong Kong pegs its currency with CNY despite this problem, it would affect Hong Kongs position as a global financial centre. It may increase the risks faced by Hong Kong, where there could be rapid increase in interest rates and a banking sector crisis. The HKD CNY peg might be possible when the Renminbi becomes fully convertible but as Greenwood (2009) said I dont think thatll happen quickly. This is not possible in the near future; it is only feasible in the long run. CONCLUSION As summarized by Mussa et al (2000), no single exchange rate regime is suitable for all countries due to the different economic situations and the various roles played by them in the global financial markets. Considering the Hong Kongs global financial position, the massive capital flows from China, issues with the exit strategy from the Dollar peg, compatibility issues, and the CNYs convertibility, it can be concluded that dismantling the peg with the USD and letting the currency to float freely is not advisable while the re-peg with the Chinese Renminbe might be possible only in the long run. The 27 year Linked Exchange Rate system followed by Hong Kong which withstood many major external shocks remains to be the best option currently available for Hong Kong. Page 2 https://www.iamtn.org/content/currency-market-review-1 https://www.forexhelp.com/article/1450 www.bloomberg.com