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Global Imbalances and the Accumulation of Risk. CEPS Policy Brief No. 189, June 12 2009

Daniel, Gros. (2009) Global Imbalances and the Accumulation of Risk. CEPS Policy Brief No. 189, June 12 2009. [Policy Paper]

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    Abstract

    In his latest Policy Brief, Daniel Gros gives a new angle on why the existence of current account ‘imbalances’ should provoke the greatest financial crisis in living history if the raison d’être of a financial system is to deal with imbalances (between savers and investors). He argues that one has to take into account the way current account deficits are financed and how flow imbalances accumulated into large stock disequilibria. In his view, the crisis was the product of a mismatch between the demand for safe, liquid and short-term assets by foreign central banks, which were accumulating large reserves, and the huge supply provided by US households of long-term US mortgage debt.

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    Item Type: Policy Paper
    Subjects for non-EU documents: EU policies and themes > External relations > international economy
    EU policies and themes > Policies & related activities > economic and financial affairs > Single Market > capital, goods, services, workers
    EU policies and themes > Policies & related activities > economic and financial affairs > financial crisis 2008-on and consequences/reforms
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Policy Briefs
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 25 Jun 2009
    Page Range: p. 4
    Last Modified: 15 Feb 2011 18:13
    URI: http://aei.pitt.edu/id/eprint/11229

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