Global imbalances: current accounts and financial flows
Stephen G Cecchetti*
Economic Adviser and Head of the Monetary and Economic Department
Bank for International Settlements
Remarks prepared for the
Myron Scholes Global Markets Forum University of Chicago
27 September 2011
"...Returning to where I started, current account deficits are large and rising. Global imbalances remain. But imbalances of this size cannot and will not be with us forever. The risk is that the adjustments will be disorderly. Surplus countries, and their investors, could suddenly decide that they no longer want to finance new borrowing by deficit countries. Or, even worse than merely stopping, they could quickly repatriate their foreign investments. The result would be intense pressure on nominal exchange rates..."