De Wikipedia, la enciclopedia libre
Saltar a navegación Saltar a búsqueda

La balanza de pagos (también conocido como la balanza de pagos internacionales y abreviados BOP o BDP ) de un país es la diferencia entre todo el dinero que fluye en el país en un período determinado de tiempo (por ejemplo, un trimestre o un año) y la salida de dinero al resto del mundo. Estas transacciones financieras son realizadas por individuos, empresas y organismos gubernamentales para comparar los ingresos y pagos que surgen del comercio de bienes y servicios.

La balanza de pagos consta de dos componentes: la cuenta corriente y la cuenta de capital . La cuenta corriente refleja el ingreso neto de un país, mientras que la cuenta de capital refleja el cambio neto en la propiedad de los activos nacionales.

Historia [ editar ]

Hasta principios del siglo XIX, el comercio internacional estaba muy regulado y representaba una parte relativamente pequeña en comparación con la producción nacional. En la Edad Media, el comercio europeo se regulaba típicamente a nivel municipal en aras de la seguridad de la industria local y de los comerciantes establecidos. [1]

Mercantilismo [ editar ]

A partir del siglo XVI, el mercantilismo se convirtió en la teoría económica dominante que influyó en los gobernantes europeos. Las regulaciones comerciales locales fueron reemplazadas por reglas nacionales que apuntaban a aprovechar la producción económica de los países. [2] En general, se favorecieron las medidas para promover un superávit comercial (como los aranceles ).

La ortodoxia predominante de la era mercantilista era la noción (ahora desacreditada) de que la acumulación de divisas o, en ese momento, de metales preciosos, hacía más ricos a los países, por lo que los países favorecían la exportación de sus propios bienes para generar superávit en la balanza de pagos. Este punto de vista prevalece en El tesoro de Inglaterra por el comercio exterior (1664) de Thomas Mun . [3]

El crecimiento económico se mantuvo en niveles bajos en la era mercantilista; No se considera que el ingreso per cápita global promedio haya aumentado significativamente en los 800 años anteriores a 1820, y se estima que aumentó en promedio menos del 0.1% por año entre 1700 y 1820. [4] Con niveles muy bajos de La integración financiera entre naciones y con el comercio internacional que generalmente representa una baja proporción del PIB de cada nación, las crisis de la base de la pirámide fueron muy raras. [4]

1820-1914: Economía clásica [ editar ]

El oro fue el principal activo de reserva durante la era del patrón oro.

El dogma mercantilista fue atacado primero por David Hume , luego Adam Smith y David Ricardo . [3]

En los ensayos Sobre el dinero y Sobre la balanza comercial , Hume argumentó que la acumulación de metales preciosos crearía inflación monetaria sin ningún efecto real sobre las tasas de interés. Es la base de lo que se conoce en los estudios económicos modernos como la teoría cuantitativa del dinero , la neutralidad del dinero y la consideración de las tasas de interés no como un fenómeno monetario, sino como un fenómeno real. Adam Smith construyó sobre esta base. Acusó a los mercantilistas de estar en contra del libre comercio y de confundir el dinero con la riqueza. [3]

David Ricardo basó sus argumentos en la Ley de Say , desarrollando la teoría de la ventaja comparativa , que sigue siendo la teoría dominante del crecimiento y el comercio en la economía moderna. [3]

Después de la victoria en las guerras napoleónicas, Gran Bretaña comenzó a promover el libre comercio, reduciendo unilateralmente sus aranceles comerciales. Ya no se fomentaba el acaparamiento de oro y, de hecho, Gran Bretaña exportó más capital como porcentaje de su renta nacional que cualquier otra nación acreedora desde entonces. [5] Las exportaciones de capital de Gran Bretaña ayudaron aún más a corregir los desequilibrios globales, ya que tendían a ser contracíclicos, aumentando cuando la economía británica entraba en recesión, compensando así a otros estados por la pérdida de ingresos por la exportación de bienes. [4]

Según el historiador Carroll Quigley , Gran Bretaña pudo permitirse actuar con benevolencia [6] en el siglo XIX debido a las ventajas de su ubicación geográfica, su poderío naval y su ascendencia económica como la primera nación en disfrutar de una revolución industrial . [7] Sin embargo, algunos, como Otto von Bismarck , vieron la promoción del libre comercio por parte de Gran Bretaña como una forma de mantener su posición dominante. Un punto de vista propuesto por economistas como Barry Eichengreen es que la primera era de la globalización comenzó con el tendido de cables telegráficos transatlánticos.en la década de 1860, lo que facilitó un rápido aumento del ya creciente comercio entre Gran Bretaña y Estados Unidos. [8]

Aunque los controles de cuenta corriente todavía se usaban ampliamente (de hecho, todas las naciones industrializadas, excepto Gran Bretaña y los Países Bajos, aumentaron sus aranceles y cuotas en las décadas previas a 1914, aunque esto fue motivado más por un deseo de proteger las "industrias nacientes" que para fomentar un superávit comercial [4] ), los controles de capital estaban en gran parte ausentes, y la gente en general tenía libertad para cruzar las fronteras internacionales sin necesidad de pasaportes.

Un patrón oro disfrutó de una amplia participación internacional, especialmente a partir de 1870, contribuyendo aún más a una estrecha integración económica entre las naciones. En el período se registró un crecimiento global sustancial, en particular para el volumen del comercio internacional, que se multiplicó por diez entre 1820 y 1870 y luego en aproximadamente un 4% anual entre 1870 y 1914. Comenzaron a ocurrir crisis de la balanza de pagos, aunque con menos frecuencia que en el caso de el resto del siglo XX. De 1880 a 1914, hubo aproximadamente [9] 8 crisis de la balanza de pagos y 8 crisis gemelas, siendo una crisis gemela una crisis de la balanza de pagos que coincide con una crisis bancaria. [4]

1914-1945: desglobalización [ editar ]

Las favorables condiciones económicas que habían prevalecido hasta 1914 fueron destrozadas por la Primera Guerra Mundial, y los esfuerzos para restablecerlas en la década de 1920 no tuvieron éxito. Varios países se reincorporaron al patrón oro alrededor de 1925. Pero los países con superávit no "cumplieron las reglas", [4] [10] esterilizando las entradas de oro en un grado mucho mayor que en el período anterior a la guerra. A las naciones deficitarias como Gran Bretaña les resultó más difícil ajustarse mediante la deflación, ya que los trabajadores tenían más derechos de voto y los sindicatos, en particular, pudieron resistir la presión a la baja sobre los salarios. Durante la Gran Depresiónla mayoría de los países abandonaron el patrón oro, pero los desequilibrios siguieron siendo un problema y el comercio internacional se redujo drásticamente. Hubo un retorno a políticas de tipo mercantilista de "empobrecimiento del vecino", con países que devaluaron competitivamente sus tipos de cambio, compitiendo así efectivamente para exportar el desempleo. Hubo aproximadamente 16 crisis de la balanza de pagos y 15 crisis gemelas (y un nivel comparativamente muy alto de crisis bancarias) [4].

1945-1971: Bretton Woods [ editar ]

Después de la Segunda Guerra Mundial, las instituciones de Bretton Woods (el Fondo Monetario Internacional y el Banco Mundial ) se establecieron para apoyar un sistema monetario internacional diseñado para fomentar el libre comercio y al mismo tiempo ofrecer a los estados opciones para corregir los desequilibrios sin tener que desinflar sus economías. Se establecieron tipos de cambio fijos pero flexibles, con el sistema anclado por el dólar, que era el único convertible en oro. El sistema de Bretton Woods marcó el comienzo de un período de alto crecimiento global, conocido como la Edad de Oro del capitalismo , sin embargo, estuvo bajo presión debido a la incapacidad o la falta de voluntad de los gobiernos para mantener controles de capital efectivos [11]y por inestabilidades relacionadas con el papel central del dólar.

Los desequilibrios hicieron que el oro fluyera fuera de los EE. UU. Y una pérdida de confianza en la capacidad de los EE. UU. De suministrar oro para todas las reclamaciones futuras de los tenedores de dólares dio como resultado una creciente demanda para convertir dólares, lo que finalmente hizo que los EE. , poniendo así fin al sistema de Bretton Woods. [4] La era 1945-1971 vio aproximadamente 24 crisis de la balanza de pagos y ninguna crisis gemela para las economías avanzadas, con economías emergentes que vieron 16 crisis de la balanza de pagos y solo una crisis gemela. [4]

1971-2009: transición, Consenso de Washington, Bretton Woods II [ editar ]

Manmohan Singh , ex primer ministro de India, demostró que los desafíos causados ​​por los desequilibrios pueden ser una oportunidad cuando dirigió el exitoso programa de reforma económica de su país después de la crisis de 1991 .

El sistema de Bretton Woods llegó a su fin entre 1971 y 1973. Hubo intentos de reparar el sistema de tipos de cambio fijos durante los años siguientes, pero pronto se abandonaron, al igual que los decididos esfuerzos de Estados Unidos para evitar los desequilibrios de la balanza de pagos. Parte de la razón fue el desplazamiento del anterior paradigma económico dominante - el keynesianismo - por el Consenso de Washington, con economistas y escritores económicos como Murray Rothbard y Milton Friedman [12] argumentando que no había una gran necesidad de preocuparse por los temas de la BoP.

Inmediatamente después del colapso de Bretton Woods, los países generalmente trataron de mantener cierto control sobre su tipo de cambio administrándolo de forma independiente o interviniendo en el mercado de divisas como parte de un bloque regional, como el Snake que se formó en 1971. [13] The Snake fue un grupo de países europeos que intentaron mantener tasas estables al menos entre sí; el grupo finalmente evolucionó hacia el Mecanismo de Tipo de Cambio Europeo(ERM) en 1979. Sin embargo, desde mediados de la década de 1970, y especialmente en la década de 1980 y principios de la de 1990, muchos otros países siguieron a los Estados Unidos en la liberalización de los controles tanto de su cuenta de capital como de su cuenta corriente, adoptando una actitud algo relajada con respecto a su balanza de pagos y en permitir que el valor de su moneda flote con relativa libertad con tipos de cambio determinados principalmente por el mercado. [4] [13]

Los países en desarrollo que optaban por permitir que el mercado determinara sus tipos de cambio a menudo presentaban déficits en cuenta corriente considerables, financiados con entradas de la cuenta de capital, como préstamos e inversiones, [14] aunque esto a menudo terminaba en crisis cuando los inversores perdían la confianza. [4] [15] [16] La frecuencia de las crisis fue especialmente alta para las economías en desarrollo en esta era: de 1973 a 1997, las economías emergentes sufrieron 57 crisis de la base de la pirámide y 21 crisis gemelas. Por lo general, pero no siempre, el pánico entre los acreedores e inversionistas extranjeros que precedió a las crisis en este período solía ser provocado por preocupaciones sobre el exceso de endeudamiento del sector privado, más que por un déficit público. Para las economías avanzadas, hubo 30 crisis de la balanza de pagos y 6 crisis bancarias.

Un punto de inflexión fue la crisis de la base de la pirámide asiática de 1997 , donde las respuestas poco comprensivas de las potencias occidentales hicieron que los responsables de la formulación de políticas en las economías emergentes reconsideraran la conveniencia de confiar en el libre mercado; en 1999, el mundo en desarrollo en su conjunto dejó de tener déficits por cuenta corriente [17], mientras que el déficit por cuenta corriente de Estados Unidos comenzó a aumentar de forma pronunciada. [18] [19] Esta nueva forma de desequilibrio comenzó a desarrollarse en parte debido a la creciente práctica de las economías emergentes, principalmente China, de vincular su moneda con el dólar, en lugar de permitir que el valor flote libremente. El estado de cosas resultante se ha denominado Bretton Woods II . [20]Según Alaistair Chan, "En el corazón del desequilibrio está el deseo de China de mantener estable el valor del yuan frente al dólar. Por lo general, un aumento del superávit comercial conduce a un aumento del valor de la moneda. Un aumento de la moneda encarece las exportaciones. , importa menos, y empuja el superávit comercial hacia el equilibrio. China elude el proceso interviniendo en los mercados cambiarios y manteniendo deprimido el valor del yuan ". [21] Según el escritor de economía Martin Wolf , en los ocho años previos a 2007, "las tres cuartas partes de las reservas de divisas extranjeras acumuladas desde el principio de los tiempos se han acumulado". [22]En contraste con el enfoque cambiado dentro de las economías emergentes, los responsables de la formulación de políticas y los economistas estadounidenses se mantuvieron relativamente indiferentes a los desequilibrios de la balanza de pagos. Desde principios hasta mediados de la década de 1990, muchos economistas de libre mercado y formuladores de políticas, como el secretario del Tesoro de Estados Unidos, Paul O'Neill, y el presidente de la Fed, Alan Greenspan.constató que el creciente déficit de Estados Unidos no era una preocupación importante. Si bien varias economías emergentes habían intervenido para aumentar sus reservas y ayudar a sus exportadores desde fines de la década de 1980, solo comenzaron a tener un superávit neto en cuenta corriente después de 1999. Esto se reflejó en el crecimiento más rápido del déficit en cuenta corriente de EE. UU. Del mismo año, con los superávits, los déficits y la consiguiente acumulación de reservas por parte de los países con superávit alcanzaron niveles récord a principios de la década de 2000 y crecieron año tras año. Algunos economistas como Kenneth Rogoff y Maurice Obstfeld comenzaron a advertir que pronto sería necesario abordar los desequilibrios récord desde 2001, junto con Nouriel Roubini.en 2004, pero no fue hasta alrededor de 2007 que sus preocupaciones comenzaron a ser aceptadas por la mayoría de los economistas. [23] [24]

Régimen de tipo de cambio [ editar ]

Bajo un sistema de tipo de cambio fijo , el banco central acomoda esos flujos comprando cualquier entrada neta de fondos al país o proporcionando fondos en moneda extranjera al mercado de divisas para igualar cualquier salida internacional de fondos, evitando así que los flujos de fondos afecten el tipo de cambio entre la moneda del país y otras monedas. Entonces, el cambio neto anual en las reservas de divisas del banco central a veces se denomina superávit o déficit de la balanza de pagos. Las alternativas a un sistema de tipo de cambio fijo incluyen un flotador administrado donde se permiten algunos cambios en los tipos de cambio, o en el otro extremo un tipo de cambio puramente flotante (también conocido como un tipo de cambio puramente flotante).tipo de cambio flexible ). Con una flotación pura, el banco central no interviene en absoluto para proteger o devaluar su moneda , permitiendo que la tasa la fije el mercado , las reservas de divisas del banco central no cambian y la balanza de pagos siempre es cero.

Componentes [ editar ]

La cuenta corriente muestra el monto neto de la renta de un país si tiene superávit o el gasto si tiene déficit. Es la suma de la balanza comercial (ingresos netos de las exportaciones menos los pagos de las importaciones), la renta de los factores (los ingresos de las inversiones extranjeras menos los pagos realizados a los inversores extranjeros) y las transferencias unilaterales. Estos elementos incluyen transferencias de bienes y servicios o activos financieros entre el país de origen y el resto del mundo. Los pagos de transferencias privadas se refieren a obsequios hechos por personas e instituciones no gubernamentales a extranjeros. Transferencias gubernamentalesse refieren a obsequios o subvenciones hechas por un gobierno a residentes extranjeros o gobiernos extranjeros. Cuando los ingresos por inversiones y las transferencias unilaterales se combinan con el saldo de bienes y servicios, llegamos al saldo de la cuenta corriente . [25] Se llama cuenta corriente ya que cubre transacciones en el "aquí y ahora" - aquellas que no dan lugar a reclamos futuros. [26]

La cuenta de capital registra el cambio neto en la propiedad de los activos externos. Incluye la cuenta de reserva (las operaciones del mercado de divisas del banco central de una nación ), junto con los préstamos y las inversiones entre el país y el resto del mundo (pero no los pagos de intereses y dividendos futuros que generan los préstamos y las inversiones; son ganancias y se registrará en la cuenta corriente). Si un país compra más activos externos por efectivo que los activos que vende por efectivo a otros países, se dice que la cuenta de capital es negativa o deficitaria.

El término "cuenta de capital" también se utiliza en el sentido más estricto que excluye las operaciones del mercado de divisas del banco central: a veces, la cuenta de reserva se clasifica como "por debajo de la línea" y, por lo tanto, no se informa como parte de la cuenta de capital. [27]

Expresado con el significado más amplio de la cuenta de capital , la identidad de la balanza de pagos establece que cualquier superávit de la cuenta corriente se equilibrará con un déficit de la cuenta de capital de igual tamaño o, alternativamente, un déficit de la cuenta corriente se equilibrará con un superávit de la cuenta de capital correspondiente:

El saldo contable, que puede ser positivo o negativo, es simplemente una cantidad que da cuenta de cualquier error estadístico y asegura que las cuentas corriente y de capital sumen cero. Según los principios de la contabilidad por partida doble , una entrada en la cuenta corriente da lugar a una entrada en la cuenta de capital y, en conjunto, las dos cuentas se equilibran automáticamente. Un saldo no siempre se refleja en las cifras reportadas para las cuentas corriente y de capital, que podrían, por ejemplo, reportar un superávit para ambas cuentas, pero cuando esto sucede, siempre significa que se ha perdido algo; más comúnmente, las operaciones del país. banco central, y lo que se ha omitido se registra en el término de discrepancia estadística (el saldo contable). [27]

Un balance general real generalmente tendrá numerosos subtítulos bajo las divisiones principales. Por ejemplo, las entradas en Cuenta corriente pueden incluir:

  • Comercio : compra y venta de bienes y servicios.
    • Exportaciones : una entrada de crédito
    • Importaciones : una entrada de débito
      • Balanza comercial : la suma de las exportaciones y las importaciones
  • Ingresos de factores : reembolsos y dividendos de préstamos e inversiones
    • Ingresos de factores : una entrada de crédito
    • Pagos de factores : una entrada de débito
      • Balance de ingresos de los factores : la suma de ganancias y pagos.

Especialmente en los balances más antiguos, había una división común entre entradas visibles e invisibles. El comercio visible registró importaciones y exportaciones de bienes físicos (las entradas para el comercio de bienes físicos, excluidos los servicios, se denominan ahora saldo de mercancías ). El comercio invisible registraría la compra y venta internacional de servicios y, a veces, se agruparía con la transferencia y la renta de los factores como ingresos invisibles. [28]

El término "superávit de la balanza de pagos" (o déficit; un déficit es simplemente un superávit negativo) se refiere a la suma de los superávits en la cuenta corriente y la cuenta de capital estrechamente definida (excluyendo los cambios en las reservas del banco central). Denotando el superávit de la balanza de pagos como superávit de la balanza de pagos, la identidad relevante es

Measurements and definitions[edit]

The balance of payments takes into account payments for a country's exports and imports of goods, services, financial capital, and financial transfers.[29][28]It is prepared in a single currency, typically the domestic currency for the country concerned. The balance of payments accounts keep systematic records of all the economic transactions (visible and non-visible) of a country with all other countries in the given time period. In the BoP accounts, all the receipts from abroad are recorded as credit and all the payments to abroad are debits. Since the accounts are maintained by double entry bookkeeping, they show the balance of payments accounts are always balanced. Sources of funds for a nation, such as exports or the receipts of loans and investments, are recorded as positive or surplus items. Uses of funds, such as for imports or to invest in foreign countries, are recorded as negative or deficit items.

When all components of the BoP accounts are included they must sum to zero with no overall surplus or deficit. For example, if a country is importing more than it exports, its trade balance will be in deficit, but the shortfall will have to be counterbalanced in other ways – such as by funds earned from its foreign investments, by running down currency reserves or by receiving loans from other countries.

While the overall BoP accounts will always balance when all types of payments are included, imbalances are possible on individual elements of the BoP, such as the current account, the capital account excluding the central bank's reserve account, or the sum of the two. Imbalances in the latter sum can result in surplus countries accumulating wealth, while deficit nations become increasingly indebted. The term "balance of payments" often refers to this sum: a country's balance of payments is said to be in surplus (equivalently, the balance of payments is positive) by a specific amount if sources of funds (such as export goods sold and bonds sold) exceed uses of funds (such as paying for imported goods and paying for foreign bonds purchased) by that amount. There is said to be a balance of payments deficit (the balance of payments is said to be negative) if the former are less than the latter. A BoP surplus (or deficit) is accompanied by an accumulation (or decumulation) of foreign exchange reserves by the central bank.

Variations in the use of term "balance of payments"[edit]

Economics writer J. Orlin Grabbe warns the term balance of payments can be a source of misunderstanding due to divergent expectations about what the term denotes. Grabbe says the term is sometimes misused by people who aren't aware of the accepted meaning, not only in general conversation but in financial publications and the economic literature.[27]

A common source of confusion arises from whether or not the reserve account entry, part of the capital account, is included in the BoP accounts. The reserve account records the activity of the nation's central bank. If it is excluded, the BoP can be in surplus (which implies the central bank is building up foreign exchange reserves) or in deficit (which implies the central bank is running down its reserves or borrowing from abroad).[28][27]

The term "balance of payments" is sometimes misused by non-economists to mean just relatively narrow parts of the BoP such as the trade deficit,[27] which means excluding parts of the current account and the entire capital account.

Another cause of confusion is the different naming conventions in use.[30] Before 1973 there was no standard way to break down the BoP sheet, with the separation into invisible and visible payments sometimes being the principal divisions. The IMF have their own standards for BoP accounting which is equivalent to the standard definition but uses different nomenclature, in particular with respect to the meaning given to the term capital account.

The IMF definition of the Balance of Payments[edit]

The International Monetary Fund (IMF) use a particular set of definitions for the BoP accounts, which is also used by the Organisation for Economic Co-operation and Development (OECD), and the United Nations System of National Accounts (SNA).[31]

The main difference in the IMF's terminology is that it uses the term "financial account" to capture transactions that would under alternative definitions be recorded in the capital account. The IMF uses the term capital account to designate a subset of transactions that, according to other usage, previously formed a small part of the overall current account.[32] The IMF separates these transactions out to form an additional top level division of the BoP accounts. Expressed with the IMF definition, the BoP identity can be written:

The IMF uses the term current account with the same meaning as that used by other organizations, although it has its own names for its three leading sub-divisions, which are:

  • The goods and services account (the overall trade balance)
  • The primary income account (factor income such as from loans and investments)
  • The secondary income account (transfer payments)

balance of payments are also known as "balance of international trade"

Uses[edit]

The balance of payments is important in international financial management for the following reasons:

First, the balance of payments is a factor in the demand and supply of a country's currency. For example, if outflows exceed inflows, then the demand for the currency in the domestic market is likely to exceed the supply in the foreign exchanging market, ceteris paribus. One can thus infer that the currency would be under pressure to depreciate against other currencies. On the other hand, if the inflows exceed outflows, then its currency would be likely to appreciate.

Second, a country's balance of payments data may signal the country’s potential as a business partner for the rest of the world. A country grappling with a major balance of payments difficulty may not be able to expand imports from the outside world. Instead, the country may impose measures to restrict imports and discourage capital outflows in order to improve the balance of payments situation. On the other hand, a country with a significant balance of payments surplus would be more likely to expand imports, offering marketing opportunities for foreign enterprises, and less likely to impose foreign exchange restrictions.

Third, balance of payments data can be used to evaluate the performance of the country in international economic competition. A country that is experiencing trade deficits year after year may be a signal that the country's domestic industries lack international competitiveness.

Imbalances[edit]

While the BoP has to balance overall, surpluses or deficits on its individual elements can lead to imbalances between countries. In general there is concern over deficits in the current account.[33]Countries with deficits in their current accounts will build up increasing debt or see increased foreign ownership of their assets. The types of deficits that typically raise concern are[28]

  • A visible trade deficit where a nation is importing more physical goods than it exports (even if this is balanced by the other components of the current account.)
  • An overall current account deficit.
  • A basic deficit which is the current account plus foreign direct investment (but excluding other elements of the capital account like short terms loans and the reserve account.)

The Washington Consensus period saw a swing of opinion towards the view that there is no need to worry about imbalances. Opinion swung back in the opposite direction in the wake of the financial crisis of 2007–2009. Mainstream opinion expressed by the leading financial press and economists, international bodies like the IMF – as well as leaders of surplus and deficit countries – has returned to the view that large current account imbalances do matter.[34] Some economists do, however, remain relatively unconcerned about imbalances[35]and there have been assertions, such as by Michael P. Dooley, David Folkerts-Landau and Peter Garber, that nations need to avoid the temptation to switch to protectionism as a means to correct imbalances.[20]

Current account surpluses coincide with current account deficits of other countries, the indebtedness of the latter therefore increasing. According to Balances Mechanics by Wolfgang Stützel this is described as surplus of expenses over revenues. Increasing imbalances in foreign trade are critically discussed as a possible cause of the financial crisis since 2007.[36] Many Keynesian economists consider the existing differences between the current accounts in the eurozone to be the root cause of the Euro crisis, for instance Heiner Flassbeck,[37] Paul Krugman[38] or Joseph Stiglitz.[39]

Causes of BoP imbalances[edit]

There are conflicting views as to the primary cause of BoP imbalances, with much attention on the US which currently has by far the biggest deficit. The conventional view is that current account factors are the primary cause[40] – these include the exchange rate, the government's fiscal deficit, business competitiveness, and private behaviour such as the willingness of consumers to go into debt to finance extra consumption.[41]An alternative view, argued at length in a 2005 paper by Ben Bernanke, is that the primary driver is the capital account, where a global savings glut caused by savers in surplus countries, runs ahead of the available investment opportunities, and is pushed into the US resulting in excess consumption and asset price inflation.[42]

Reserve asset[edit]

The US dollar has been the leading reserve asset since the end of the gold standard.

In the context of BoP and international monetary systems, the reserve asset is the currency or other store of value that is primarily used by nations for their foreign reserves.[43] BoP imbalances tend to manifest as hoards of the reserve asset being amassed by surplus countries, with deficit countries building debts denominated in the reserve asset or at least depleting their supply. Under a gold standard, the reserve asset for all members of the standard is gold. In the Bretton Woods system, either gold or the U.S. dollar could serve as the reserve asset, though its smooth operation depended on countries apart from the US choosing to keep most of their holdings in dollars.

Following the ending of Bretton Woods, there has been no de jure reserve asset, but the US dollar has remained by far the principal de facto reserve. Global reserves rose sharply in the first decade of the 21st century, partly as a result of the 1997 Asian Financial Crisis, where several nations ran out of foreign currency needed for essential imports and thus had to accept deals on unfavourable terms. The International Monetary Fund (IMF) estimates that between 2000 and mid-2009, official reserves rose from $1,900bn to $6,800bn.[44]Global reserves had peaked at about $7,500bn in mid-2008, then declined by about $430bn as countries without their own reserve currency used them to shield themselves from the worst effects of the financial crisis. From Feb 2009 global reserves began increasing again to reach close to $9,200bn by the end of 2010.[45][46]

As of 2009, approximately 65% of the world's $6,800bn total is held in U.S. dollars and approximately 25% in euros. The UK pound, Japanese yen, IMF special drawing rights (SDRs), and precious metals[47] also play a role. In 2009, Zhou Xiaochuan, governor of the People's Bank of China, proposed a gradual move towards increased use of SDRs, and also for the national currencies backing SDRs to be expanded to include the currencies of all major economies.[48][49] Dr Zhou's proposal has been described as one of the most significant ideas expressed in 2009.[50]

While the current central role of the dollar does give the US some advantages, such as lower cost of borrowings, it also contributes to the pressure causing the U.S. to run a current account deficit, due to the Triffin dilemma. In a November 2009 article published in Foreign Affairs magazine, economist C. Fred Bergsten argued that Dr Zhou's suggestion or a similar change to the international monetary system would be in the United States' best interests as well as the rest of the world's.[51] Since 2009 there has been a notable increase in the number of new bilateral agreements which enable international trades to be transacted using a currency that isn't a traditional reserve asset, such as the renminbi, as the Settlement currency.[52]

Balance of payments crisis[edit]

A BoP crisis, also called a currency crisis, occurs when a nation is unable to pay for essential imports or service its external debt repayments. Typically, this is accompanied by a rapid decline in the value of the affected nation's currency. Crises are generally preceded by large capital inflows, which are associated at first with rapid economic growth.[4] However a point is reached where overseas investors become concerned about the level of debt their inbound capital is generating, and decide to pull out their funds.[53] The resulting outbound capital flows are associated with a rapid drop in the value of the affected nation's currency. This causes issues for firms of the affected nation who have received the inbound investments and loans, as the revenue of those firms is typically mostly derived domestically but their debts are often denominated in a reserve currency. Once the nation's government has exhausted its foreign reserves trying to support the value of the domestic currency, its policy options are very limited. It can raise its interest rates to try to prevent further declines in the value of its currency, but while this can help those with debts denominated in foreign currencies, it generally further depresses the local economy.[4][17][8]

Balancing mechanisms[edit]

One of the three fundamental functions of an international monetary system is to provide mechanisms to correct imbalances.[13][54]

Broadly speaking, there are three possible methods to correct BoP imbalances, though in practice a mixture including some degree of at least the first two methods tends to be used. These methods are adjustments of exchange rates; adjustment of a nations internal prices along with its levels of demand; and rules based adjustment.[55] Improving productivity and hence competitiveness can also help, as can increasing the desirability of exports through other means, though it is generally assumed a nation is always trying to develop and sell its products to the best of its abilities.

Rebalancing by changing the exchange rate[edit]

An upwards shift in the value of a nation's currency relative to others will make a nation's exports less competitive and make imports cheaper and so will tend to correct a current account surplus. It also tends to make investment flows into the capital account less attractive so will help with a surplus there too. Conversely a downward shift in the value of a nation's currency makes it more expensive for its citizens to buy imports and increases the competitiveness of their exports, thus helping to correct a deficit (though the solution often doesn't have a positive impact immediately due to the Marshall–Lerner condition).[56]

Exchange rates can be adjusted by government[57] in a rules based or managed currency regime, and when left to float freely in the market they also tend to change in the direction that will restore balance. When a country is selling more than it imports, the demand for its currency will tend to increase as other countries ultimately[58] need the selling country's currency to make payments for the exports. The extra demand tends to cause a rise of the currency's price relative to others. When a country is importing more than it exports, the supply of its own currency on the international market tends to increase as it tries to exchange it for foreign currency to pay for its imports, and this extra supply tends to cause the price to fall. BoP effects are not the only market influence on exchange rates however, they are also influenced by differences in national interest rates and by speculation.

Rebalancing by adjusting internal prices and demand[edit]

When exchange rates are fixed by a rigid gold standard,[59] or when imbalances exist between members of a currency union such as the Eurozone, the standard approach to correct imbalances is by making changes to the domestic economy. To a large degree, the change is optional for the surplus country, but compulsory for the deficit country. In the case of a gold standard, the mechanism is largely automatic. When a country has a favourable trade balance, as a consequence of selling more than it buys it will experience a net inflow of gold. The natural effect of this will be to increase the money supply, which leads to inflation and an increase in prices, which then tends to make its goods less competitive and so will decrease its trade surplus. However the nation has the option of taking the gold out of economy (sterilising the inflationary effect) thus building up a hoard of gold and retaining its favourable balance of payments. On the other hand, if a country has an adverse BoP it will experience a net loss of gold, which will automatically have a deflationary effect, unless it chooses to leave the gold standard. Prices will be reduced, making its exports more competitive, and thus correcting the imbalance. While the gold standard is generally considered to have been successful[60] up until 1914, correction by deflation to the degree required by the large imbalances that arose after WWI proved painful, with deflationary policies contributing to prolonged unemployment but not re-establishing balance. Apart from the US most former members had left the gold standard by the mid-1930s.

A possible method for surplus countries such as Germany to contribute to re-balancing efforts when exchange rate adjustment is not suitable, is to increase its level of internal demand (i.e. its spending on goods). While a current account surplus is commonly understood as the excess of earnings over spending, an alternative expression is that it is the excess of savings over investment.[61]That is:

where CA = current account, NS = national savings (private plus government sector), NI = national investment.

If a nation is earning more than it spends the net effect will be to build up savings, except to the extent that those savings are being used for investment. If consumers can be encouraged to spend more instead of saving; or if the government runs a fiscal deficit to offset private savings; or if the corporate sector divert more of their profits to investment, then any current account surplus will tend to be reduced. However, in 2009 Germany amended its constitution to prohibit running a deficit greater than 0.35% of its GDP[62]and calls to reduce its surplus by increasing demand have not been welcome by officials,[63]adding to fears that the 2010s would not be an easy decade for the eurozone.[64] In their April 2010 world economic outlook report, the IMF presented a study showing how with the right choice of policy options governments can shift away from a sustained current account surplus with no negative effect on growth and with a positive impact on unemployment.[65]

Rules based rebalancing mechanisms[edit]

Nations can agree to fix their exchange rates against each other, and then correct any imbalances that arise by rules based and negotiated exchange rate changes and other methods. The Bretton Woods system of fixed but adjustable exchange rates was an example of a rules based system. John Maynard Keynes, one of the architects of the Bretton Woods system had wanted additional rules to encourage surplus countries to share the burden of rebalancing, as he argued that they were in a stronger position to do so and as he regarded their surpluses as negative externalities imposed on the global economy.[66]Keynes suggested that traditional balancing mechanisms should be supplemented by the threat of confiscation of a portion of excess revenue if the surplus country did not choose to spend it on additional imports. However his ideas were not accepted by the Americans at the time. In 2008 and 2009, American economist Paul Davidson had been promoting his revamped form of Keynes's plan as a possible solution to global imbalances which in his opinion would expand growth all round without the downside risk of other rebalancing methods.[56][67][68]

Post-Washington Consensus developments[edit]

Speaking after the 2009 G-20 London summit, Gordon Brown announced "the Washington Consensus is over".[69]There is now broad agreement that large imbalances between different countries do matter; for example mainstream U.S. economist C. Fred Bergsten has argued the U.S. deficit and the associated large inbound capital flows into the U.S. was one of the causes of the financial crisis of 2007–2010.[51]Since the crisis, government intervention in BOP areas such as the imposition of capital controls or foreign exchange market intervention has become more common and in general attracts less disapproval from economists, international institutions like the IMF and other governments.[70][71]

In 2007, when the crises began, the global total of yearly BoP imbalances was $1680 billion. On the credit side, the biggest current account surplus was China with approx. $362 billion, followed by Japan at $213 billion and Germany at £185 billion, with oil producing countries such as Saudi Arabia also having large surpluses. On the debit side, the US had the biggest current account deficit at over $1100 billion, with the UK, Spain and Australia together accounting for close to a further $300 billion.[22]

While there have been warnings of future cuts in public spending, deficit countries on the whole did not make these in 2009, in fact the opposite happened with increased public spending contributing to recovery as part of global efforts to increase demand.[72] The emphases has instead been on the surplus countries, with the IMF, EU and nations such as the U.S., Brazil and Russia asking them to assist with the adjustments to correct the imbalances.[73][74]

Economists such as Gregor Irwin and Philip R. Lane have suggested that increased use of pooled reserves could help emerging economies not to require such large reserves and thus have less need for current account surpluses.[75]

Writing for the FT in Jan 2009, Gillian Tett says she expects to see policy makers becoming increasingly concerned about exchange rates over the coming year.[76]In June 2009, Olivier Blanchard the chief economist of the IMF wrote that rebalancing the world economy by reducing both sizeable surpluses and deficits will be a requirement for sustained recovery.[77]

In 2008 and 2009, there was some reduction in imbalances, but early indications towards the end of 2009 were that major imbalances such as the U.S. current account deficit are set to begin increasing again.[35][78]

Japan had allowed her currency to appreciate through 2009, but has only limited scope to contribute to the rebalancing efforts thanks in part to her aging population. The euro used by Germany is allowed to float fairly freely in value, however further appreciation would be problematic for other members of the currency union such as Spain, Greece and Ireland who run large deficits. Therefore, Germany has instead been asked to contribute by further promoting internal demand, but this hasn't been welcomed by German officials.[73]

China has been requested to allow the renminbi to appreciate but until 2010 had refused, the position expressed by her premier Wen Jiabao being that by keeping the value of the renmimbi stable against the dollar China has been helping the global recovery, and that calls to let her currency rise in value have been motivated by a desire to hold back China's development.[74] After China reported favourable results for her December 2009 exports however, the Financial Times reported that analysts are optimistic that China will allow some appreciation of her currency around mid-2010.[79]

In April 2010 a Chinese official signalled the government is considering allowing the renminbi to appreciate,[80]but by May analysts were widely reporting the appreciation would likely be delayed due to the falling value of the Euro following the 2010 European sovereign debt crisis.[81] China announced the end of the renminbi's peg to the dollar in June 2010; the move was widely welcomed by markets and helped defuse tension over imbalances prior to the 2010 G-20 Toronto summit. However the renminbi remains managed and the new flexibility means it can move down as well as up in value; two months after the peg ended the renminbi had only appreciated against the dollar by about 0.8%.[82]

By January 2011, the renminbi had appreciated against the dollar by 3.7%, which means it's on track to appreciate in nominal terms by 6% per year. As this reflects a real appreciation of 10% when China's higher inflation is accounted for, the U.S. Treasury once again declined to label China a currency manipulator in their February 2011 report to Congress. However Treasury officials did advise the rate of appreciation was still too slow for the best interests of the global economy.[83][84]

In February 2011, Moody's analyst Alaistair Chan has predicted that despite a strong case for an upward revaluation, an increased rate of appreciation against the dollar is unlikely in the short term.[85] And as of February 2012, China's currency had been continuing to appreciate for a year and a half, while drawing remarkably little notice.[86]

While some leading surplus countries including China have been taking steps to boost domestic demand, these have not yet been sufficient to rebalance out of their current account surpluses. By June 2010, the U.S. monthly current account deficit had risen back to $50 billion, a level not seen since mid-2008. With the US currently suffering from high unemployment and concerned about taking on additional debt, fears are rising that the US may resort to protectionist measures.[87]

Competitive devaluation after 2009[edit]

By September 2010, international tensions relating to imbalances had further increased. Brazil's finance minister Guido Mantega declared that an "international currency war" has broken out, with countries competitively trying to devalue their currency so as to boost exports. Brazil has been one of the few major economies lacking a reserve currency to abstain from significant currency intervention, with the real rising by 25% against the dollar since January 2009. Some economists such as Barry Eichengreen have argued that competitive devaluation may be a good thing as the net result will effectively be equivalent to expansionary global monetary policy. Others such as Martin Wolf saw risks of tensions further escalating and advocated that coordinated action for addressing imbalances should be agreed on at the November G20 summit.[45][88][89]

Commentators largely agreed that little substantive progress was made on imbalances at the November 2010 G20. An IMF report released after the summit warned that without additional progress there is a risk of imbalances approximately doubling to reach pre-crises levels by 2014.[90]

Economic policy and the balance of payment[edit]

Balance of payments and international headcount data is critical to the formulation of national and international economic policies. The balance of payments imbalances and foreign direct investment (FDI) is crucial for a country's policymakers to seek solutions. The impact of national and international policies can be seen in the balance of payments data. For example, one country may implement a policy to attract foreign investment. In contrast, another country may want to keep its currency relatively low to stimulate exports. Although a country's balance of payments will bring its current account and capital account into balance, there will be imbalances between countries' accounts. According to the World Bank data, the current account deficit in the United States is $498 billion in 2019 (The World Bank)

Suppose a country's balance of payments deficits are persistent. In that case, the country may suffer from a loss of confidence as its foreign exchange reserves deplete. At the same time, it makes the country very vulnerable to seasonal, cyclical or unpredictable fluctuations in foreign countries. It could lead to excessive inflation at home. Therefore, the stability of currency provides a strong guarantee for the sustainable development of the economy. Countries can analyze the current economic situation domestically and internationally through the annual balance of payment and formulate effective monetary policy combined with the political influence of international and multilateral relations (Zolotas and Ethymiou 1965)

The economic policy objectives could, in principle, serve as the standard for the balance of payments policies. At the same time, exchange rate policy is treated as income policy. F. De Roos (1982) argues that only equilibrium of the balance of payments can be considered as a long term criterium for the balance of payments policy in the case of stable exchange rates. In the case of flexible exchange rates, the criterium can be found in the degree of domestic economic stability.

See also[edit]

  • Currency crisis
  • Exchange rate regime
  • Foreign exchange reserves
  • History of money
  • IMF Balance of Payments Manual
  • Sectoral balances
  • Sovereign default
  • Sterilization (economics)
  • Sudden stop (economics)

Notes and citations[edit]

  1. ^ Annual fairs would sometimes allow exceptions to the standard regulations.
  2. ^ Karl Polanyi (2002). The Great Transformation. Beacon Press. ISBN 978-0-8070-5643-1.
  3. ^ a b c d Thirlwall, Anthony Philip (2012). Balance of Payments Constrained Growth Models: History and Overview. p. 11.
  4. ^ a b c d e f g h i j k l m Eirc Helleiner; Louis W Pauly; et al. (2005). John Ravenhill (ed.). Global Political Economy. Oxford University Press. pp. 7–15, 154, 177–204.
  5. ^ Harold James (2009). The End of Globalization. p. 12. ISBN 9780674039087.
  6. ^ FT article
  7. ^ Carroll Quigley (1995). Tragedy and Hope. GSG & Associates, Inc. pp. 243, 263. ISBN 0-945001-10-X.
  8. ^ a b Barry Eichengreen and Michael D Bordo (11 November 2001). "Crises Now and Then" (PDF). Berkeley. Retrieved 17 May 2010.
  9. ^ Different economic historians don't always classify the same events as a BoP or twin crises
  10. ^ One of the informal rules during the gold standard era was that countries running a trade surplus ought to allow the net inflow of gold they receive to increase their domestic money supply. This would have an expansionary and possibly inflationary effect on their economies, helping to reverse the earlier trade surplus and thus correct the imbalance. However central banks of surplus countries could choice not to allow the extra gold to circulate in their domestic economies, hoarding it in their vaults, and thus the burden of rebalancing would fall entirely on the deficit countries which may need to deflate their economies in order to reduce prices and regain competitiveness.
  11. ^ Dani Rodrik (11 May 2010). "Greek Lessons for the World Economy". Project Syndicate. Retrieved 19 May 2010.
  12. ^ e.g., in his influential Free to Choose TV series
  13. ^ a b c Roberts, Richard (1999). Inside International Finance. Orion. pp. 1–27. ISBN 0-7528-2070-2.
  14. ^ In the 1970s and 1980s a significant part of the capital flowing into developing countries was re-cycled petro dollars, the oil producing countries were among the few to have large surpluses but at that time the US wasn't issuing many bonds so the capital tended to flow to developing countries via the intermediary of western investment banks.
  15. ^ Heakal, Reem. "Understanding Capital And Financial Accounts in the Balance of Payments". Investopedia. Retrieved 11 December 2009.
  16. ^ Eswar S. Prasad; Raghuram G. Rajan & Arvind Subramanian (16 April 2007). "Foreign Capital and Economic Growth" (PDF). Peterson Institute. Archived (PDF) from the original on 14 December 2009. Retrieved 15 December 2009.
  17. ^ a b Wolf, Martin (2009). "3". Fixing Global Finance. Yale University Press. pp. 31–39.
  18. ^ U.S. Trade in Goods and Services – Balance of Payments 1960 thru 2008
  19. ^ Data visualization from OECD Archived 14 May 2011 at the Wayback Machine, select 'Current account imbalances' or 'Reserve Accumalation' on the stories tab, then move the date slider to see how imbalances developed between 1990–2008.
  20. ^ a b Michael P. Dooley; David Folkerts-Landau; Peter Garber (February 2009). "Bretton Woods II Still Defines the International Monetary System". National Bureau of Economic Research.
  21. ^ Chan, Alaistair. "The U.S. – China Balance of Payments Relationship". Moody's Analytics. Retrieved 23 February 2011.
  22. ^ a b Martin Wolf (8 October 2008). "Asia's Revenge". The Financial Times. Retrieved 10 January 2010.
  23. ^ Wolf, Martin (2009). Fixing Global Finance. Yale University Press. pp. 41, 82, 114–16. ISBN 978-0-300-14277-8.
  24. ^ Carmen Reinhart and Kenneth Rogoff (2010). This Time Is Different: Eight Centuries of Financial Folly. Princeton University Press. pp. 208–12. ISBN 978-0-19-926584-8.
  25. ^ Carbaugh, Robert J. International Economics. p. 347.
  26. ^ adam antiam (2005). Exchange Rates and International Finance (4th ed.). Prentice Hall. pp. 10–35. ISBN 0-273-68306-3.
  27. ^ a b c d e Orlin, Crabbe (1996). International Financial Markets (3rd ed.). Prentice Hall. pp. 430–52. ISBN 0-13-206988-1.
  28. ^ a b c d Sloman, John (2004). Economics. Penguin. pp. 516–17, 555–59.
  29. ^ Cheol S. Eun, Bruce G. Resnick (2013). International Financial Management. China Machine.
  30. ^ Colin Danby. "Balance of Payments: Categories and Definitions". University of Washington. Retrieved 11 December 2009.
  31. ^ IMF Balance of Payments Manual, Chapter 2 "Overview of the Framework", Paragraph 2.15 [1]
  32. ^ The IMF Capital account records mainly capital transfers, the amounts involved are usually very small compared to other BoP transactions, except in rare cases where a country is the beneficiary of substantial debt forgiveness.
  33. ^ "The Determinants & Excessiveness of Current Account Deficits in Eastern Europe & the Former Soviet Union" (PDF). Aleksander Aristovnik, William Davidson Institute at the University of Michigan. 19 July 2006. Archived from the original (PDF) on 20 July 2011. Retrieved 5 July 2010.
  34. ^ Though there is difference of opinion on how to resolve the issue with the major surplus countries apart from Japan resisting pressure to lower their own surpluses.
  35. ^ a b Krishna Guha (24 October 2009). "Recovery takes an unclear path". The Financial Times. Archived from the original on 31 January 2012. Retrieved 10 January 2010.
  36. ^ Wolfgang Münchau, "Kernschmelze im Finanzsystem", Carl Hanser Verlag, München, 2008, p. 155ff.; vgl. Benedikt Fehr: "'Bretton Woods II ist tot. Es lebe Bretton Woods III'" in FAZ 12 May 2009, p. 32. FAZ.Net, Stephanie Schoenwald: "Globale Ungleichgewichte. Sind sie für die Finanzmarktkrise (mit-) verantwortlich?" KfW (Kreditanstalt für Wiederaufbau) Research. MakroScope. No. 29, February 2009. p. 1.
    Zu den außenwirtschaftlichen Ungleichgewichten als "makroökonomischer Nährboden" der Krise siehe auch Deutsche Bundesbank: Finanzstabilitätsbericht 2009, Frankfurt am Main, November 2009 Archived 7 March 2012 at the Wayback Machine (PDF)., Gustav Horn, Heike Joebges, Rudolf Zwiener: "Von der Finanzkrise zur Weltwirtschaftskrise (II), Globale Ungleichgewichte: Ursache der Krise und Auswegstrategien für Deutschland" IMK-Report Nr. 40, August 2009, pp. 6-7. (PDF; 260 kB)
  37. ^ Heiner Flassbeck: Wege aus der Eurokrise. YouTube https://www.youtube.com/watch?v=mfKuosvO6Ac
  38. ^ Paul Krugman Blog: Germans and Aliens, Online verfügbar unter http://krugman.blogs.nytimes.com/2012/01/09/germans-and-aliens/
  39. ^ Joseph Stiglitz: Is Mercantilism Doomed to Fail?, Online available at https://www.youtube.com/watch?v=D207fSLnxHk
  40. ^ Richard Duncan (31 January 2008). "Buyers, not savers, caused America's deficit". The Financial Times. Archived from the original on 27 November 2010. Retrieved 13 January 2010.
  41. ^ Martin Wolf (4 November 2009). "Private behaviour will shape our path to fiscal stability". The Financial Times. Retrieved 13 January 2010.
  42. ^ "Governor Ben S. Bernanke, The Global Saving Glut and the U.S. Current Account Deficit". Federalreserve.gov. March 2005. Retrieved 13 January 2010.
  43. ^ However individual states may choose to keep some of their reserves in the form of whatever currency is used by nations they buy most of their imports from (providing mechanisms are available to settle trades in that currency, which isn't always the case).
  44. ^ John Plender (11 November 2009). "Decline but no fall". The Financial Times. Retrieved 19 January 2010.
  45. ^ a b Martin Wolf (29 September 2010). "Currencies clash in new age of beggar-my-neighbour". The Financial Times. Archived from the original on 30 September 2010. Retrieved 29 September 2010.
  46. ^ Martin Wolf (5 April 2011). "Waiting for the great rebalancing". The Financial Times. Archived from the original on 9 May 2011. Retrieved 23 May 2011.
  47. ^ Mainly gold, but also silver, platinum and palladium.
  48. ^ Jamil Anderlini in Beijing (23 March 2009). "China calls for new reserve currency". Financial Times. Archived from the original on 15 April 2009. Retrieved 13 April 2009.
  49. ^ Zhou Xiaochuan (23 March 2009). "Reform the International Monetary System". People's Bank of China. Retrieved 13 April 2009.
  50. ^ Geoff Dyer in Beijing (24 August 2009). "The dragon stirs". The Financial Times. Retrieved 18 September 2009.
  51. ^ a b C. Fred Bergsten (November 2009). "The Dollar and the Deficits". Foreign Affairs. Archived from the original on 1 December 2009. Retrieved 15 December 2009.
  52. ^ Gerard Lyons (27 April 2010). "China is undermining the dollar by the back-door". The Financial Times. Archived from the original on 30 April 2010. Retrieved 1 May 2010.
  53. ^ It sometimes takes only one or two big investors pulling out to trigger a mass panic due to herd effects.
  54. ^ Scores of other text books old and new also give this definition, see for example International monetary relations: theory, history, and policy (1976), p. 611 by Leland B. Yeager. The other two basic functions are to provide liquidity and to impart confidence. While during the Washington Consensus period fewer emphasis was placed on the need for balance, in the main a requirement for correction was still accepted, though many argued that governments should leave such correction to the markets.
  55. ^ Following the collapse of the Bretton Woods system, rules based adjustment is mostly theoretical.
  56. ^ a b Paul Davidson (2009). The Keynes Solution: The Path to Global Economic Prosperity. Palgrave Macmillan. pp. 123–38. ISBN 978-0-230-61920-3.
  57. ^ Though except in the early years of the Bretton Woods System when international markets were heavily constrained by capital controls, managing the exchange rate has often been problematic as the markets often want the currency to move in the opposite direction to governments. Developing countries in particular would often experience difficulties, though even advanced economies like Britain had issues, with Black Wednesday an example when she had insufficient reserves to counter the market.
  58. ^ There are commonly used financial instruments that allow importers to pay with their domestic currency, and the reserve asset will often play an intermediary role, but ultimately exporters require paying in their own currency.
  59. ^ In practice there is typically still a small degree of exchange rate flexibility due to the cost of shipping gold between nations.
  60. ^ Though not problem free, see Paper from the Bank of Canada on current imbalances in context of international monetary system history
  61. ^ Wolfgang Munchau (7 June 2009). "Down and out for the long term in Germany". The Financial Times. Retrieved 10 January 2010.
  62. ^ Bertrand Benoit (29 May 2009). "Berlin vote heralds big spending cuts". The Financial Times. Archived from the original on 1 June 2009. Retrieved 12 January 2010.
  63. ^ Ralph Atkins (30 September 2009). "The Bundesbank and global imbalances". The Financial Times. Retrieved 12 January 2010.
  64. ^ Martin Wolf (5 January 2010). "The eurozones next decade will be tough". The Financial Times. Archived from the original on 1 April 2010. Retrieved 12 January 2010.
  65. ^ "Getting the balance right" (PDF). International Monetary Fund. 18 April 2010. Retrieved 17 May 2010.
  66. ^ Joseph Stiglitz (5 May 2010). "Can the Euro be Saved?". Project Syndicate. Archived from the original on 9 May 2010. Retrieved 17 May 2010.
  67. ^ Reforming the worlds international money (pdf) (2008) by Paul Davidson
  68. ^ "Rebalancing the global economy: A Primer for Policymaking (p.174 et seq.)" (PDF). Centre for Economic Policy Research (CEPR). 2010. Archived from the original (PDF) on 22 February 2011. Retrieved 1 December 2011.
  69. ^ "Prime Minister Gordon Brown: G20 Will Pump Trillion Dollars into World Economy". Sky News. 2 April 2009.
  70. ^ Dani Rodrik (11 March 2010). "The End of an Era in Finance". Project Syndicate. Retrieved 24 May 2010.
  71. ^ Mansoor Mohi-Uddin (22 September 2010). "Towards a new era of currency intervention". The Financial Times. Retrieved 23 September 2010.
  72. ^ The public spending did not however make the imbalances worse as they were offset by reduced private sector demand and debt in the deficit countries.
  73. ^ a b Chris Giles (11 January 2009). "Surplus nations urged by IMF to take up baton". The Financial Times. Archived from the original on 6 May 2015. Retrieved 10 January 2010.
  74. ^ a b Geoff Dyer (29 December 2009). "Wen dismisses currency pressure". The Financial Times. Retrieved 10 January 2010.
  75. ^ Philip R. Lane. "Global Imbalances and Global Governance" (PDF). CEPR. Retrieved 11 December 2009.
  76. ^ Gillian Tett (28 January 2010). "Calls for a new Bretton Woods not so mad". Financial Times. Retrieved 29 January 2010.
  77. ^ Olivier Blanchard (18 June 2009). "What is needed for a lasting recovery". The Financial Times. Retrieved 17 May 2010.
  78. ^ Gideon Rachman (12 January 2010). "Bankruptcy could be good for America". The Financial Times. Archived from the original on 28 January 2010. Retrieved 12 January 2010.
  79. ^ Patti Waldmeir (10 January 2010). "China's exports rise as economy picks up". The Financial Times. Archived from the original on 11 January 2010. Retrieved 10 January 2010.
  80. ^ Jamil Anderlini in Beijing (6 April 2010). "Beijing lays ground for renminbi shift". Financial Times. Archived from the original on 6 April 2010. Retrieved 8 April 2010.
  81. ^ Kevin Brown in Kuala Lumpur, Jamil Anderlini in Beijing and Robin Harding in Tokyo (20 May 2010). "Asian exporters rattled by eurozone turmoil". Financial Times. Archived from the original on 22 May 2010. Retrieved 21 May 2010.
  82. ^ Geoff Dyer (10 August 2010). "China trade surplus widens". The Financial Times. Archived from the original on 16 August 2010. Retrieved 24 August 2010.
  83. ^ Treasury staffers (4 February 2011). "Report to Congress on International Economic and Exchange Rate Policies" (PDF). United States Department of the Treasury. Retrieved 25 February 2011.
  84. ^ Robin Harding (5 February 2011). "US retreats from attack on renminbi". The Financial Times. Retrieved 7 February 2011.
  85. ^ Chan, Alaistair. "The U.S. – China Balance of Payments Relationship". Retrieved 22 February 2011.
  86. ^ David Leonhardt (15 February 2012). "Appreciation in China's Currency Goes Largely Unnoted". The New York Times. Retrieved 16 March 2012.
  87. ^ Michael Pettis (22 August 2010). "The last chance to avoid a global trade war". The Financial Times. Archived from the original on 8 August 2010. Retrieved 24 August 2010.
  88. ^ Jonathan Wheatley in São Paulo and Peter Garnham in London (27 September 2010). "Brazil in 'currency war' alert". The Financial Times. Archived from the original on 29 September 2010. Retrieved 29 September 2010.
  89. ^ Alan Beattie (27 September 2010). "Hostilities escalate to hidden currency war". The Financial Times. Archived from the original on 29 September 2010. Retrieved 29 September 2010.
  90. ^ IMF staffers (12 November 2010). "G-20 Mutual Assessment Process – IMF Staff Assessment of G-20 Policies1" (PDF). International Monetary Fund. Retrieved 19 November 2010.

Further reading[edit]

  • Economics 8th Edition by David Begg, Stanley Fischer and Rudiger Dornbusch, McGraw-Hill
  • Economics Third Edition by Alain Anderton, Causeway Press

External links[edit]

Data[edit]

  • Comprehensive international BOP statistics from the IMF
  • BOP for Hong Kong
  • US statistics (See "External Sector")
  • Detailed historical BOP data from the US Bureau of Economic Analyses
  • European Central Bank (ECB, as source of euro area) (1 March 2017). "Balance of payments, capital account, monthly data". Eurostat. Archived from the original on 16 May 2018. Retrieved 17 May 2018.

Analysis[edit]

  • Report to Congress on International Economic and Exchange Rate Policies Feb 2011 US treasury report with sections on BOP issues for major trading blocs and countries.
  • Paper from the Bank of Canada on challenges for 2010 regarding current imbalances, in context of international monetary system history
  • European Central Bank paper on the accumulation of reserves and imbalances since 1995