Global imbalances: current accounts and financial flows

Remarks by Mr Stephen G Cecchetti, Economic Adviser and Head of Monetary and Economic Department of the BIS, prepared for the Myron Scholes Global Markets Forum, University of Chicago, 27 September 2011.


My topic today is cross-border flows. It is difficult to find anyone who would protest the increase in international trade. To give you some sense of the magnitude: in a span of 30 years, the global ratio of exports plus imports to GDP has risen from 43%, in 1980, to 59%, in 2010. Even in the United States, notoriously less open than other industrialised countries, the same measure rose from a much more modest 21% to a still relatively low 32%. The benefits we all reap from this are so easy to see that virtually no one seriously suggests reversing the tide. In fact, I would count the fact of so much more trade openness, as well as society's attitude towards it, as one of the great successes of the latter half of the 20th century. And, I consider the fact that the ugly spectre of protectionism has not raised its head during the last four crisis-ridden years as both a victory and a relief.