Welcome to the currency war scorecard: charting potential winners and losers.

• Author: Kessler, Martin

Depending on who you are speaking to, currency wars bare everywhere or nowhere. In his Stavros Niarchos Foundation lecture in May, Fred Bergsten, former director of the Peterson Institute, declared "war on the currency wars," characterizing them as the biggest threat to the international monetary system. Conversely, Philipp Hildebrand, former chairman of the Swiss National Bank, rifled his op-ed in the Financial Times in February "No such thing as a global currency war." Coined in September 2010 by Guido Mantega, Brazil's finance minister, the term seems to be looking for a definition. Some would point to recent monetary events: the Bank of Japan's aggressive new framework, and the surprise interest rate cuts in Israel, Turkey, or Australia. But who is "attacking" and who is "defending"? What exactly is the war being fought?

Fundamentally, currency wars are about the de-synchronization of international business cycles. Developed countries have reached the zero lower bound in monetary policy and have started taking unconventional measures to stimulate growth and inflation, while emerging markets have experienced (with some important differences among countries) a rapid return to growth with inflationary pressures. In this situation, emerging markets feel threatened by capital flows stemming from the easy monetary conditions set by the United States, Japan, and (to a lesser extent) the eurozone. In turn, they feel the need to accumulate foreign exchange reserves to avoid an appreciation of their currency and a loss of competitiveness. Conversely, the United States and the eurozone protest the setting of a non-cooperative exchange rate policy which drains their liquidity and hurts their net exports.

The figures presented here are an attempt to provide a simple but telling picture of the facts through those two lenses. To do so, we selected seven variables which we separated in two groups. The first describes the extent to which countries might engage and benefit from currency manipulation, and the second the vulnerability to other countries' potential manipulation. By applying those variables to twenty-seven major countries (fifteen emerging and twelve advanced), we ranked each on both scales to assess and map the currency wars.

In the first group, the variables are:

* Current account balance: Averaged over 2010-2012, shows the extent to which the country benefits from a competitiveness advantage.

* Foreign exchange reserve accumulation (2010...