of development and natural assets. a surplus may be justified by a country ’ s need to have a high level of domestic saving – for example due to an ageing population – but also means that consumption will be held back, thus reducing the demand for other countries ’ exports. however, some underlying problems, such as a too low level of saving linked to a too optimistic view of the future, may be reflected in a weakening of the current account. this can also contribute to generally low interest rates which, in combination with other factors such as shortcomings in the supervision of the financial sector, generate the potential for a financial crisis of the type we have just experienced. the factors that above all led the imbalances to grow in the years before the crisis were above all increased saving in the public sector and the corporate sector in china, together with increased saving in the oil - producing countries. investment, on the other hand, remained at approximately the same level as previously. 8 it appears that the increase in saving exerted a worldwide downward pressure on long - term interest rates, which may have led investors to turn to higher - risk assets in the hunt for higher yields. in the united states, however, saving was low and investment was high partly because of the low interest rates. the low interest rates also stimulated the housing market which, in combination with decades of an china has had a very high investment ratio, but aggregate saving is even higher. bis central bankers ’ speeches expansionary housing policy, led to the build - up of a bubble that eventually burst. many observers therefore believe that the global imbalances were one of the causes of the financial crisis. 9 there are better and worse reasons for current account surpluses and deficits in the 1970s and 1980s, large current account surpluses or deficits were generally regarded as something negative. this period was marked by fixed exchange rates and by the regulation of capital flows across national borders. a deficit was often seen as a sign of an approaching devaluation. however, after the capital markets were deregulated and the exchange rates began to float to a greater extent, the view became more positive. it was assumed that changes in the current accounts reflected an optimal redistribution of the freely - moving capital. in the 2000s, however, we began to hear warnings that, above all, a rapid correction of the imbalances could have serious consequences for the value of the dollar, resulting in rising long - term interest rates, recession and a possible financial

period ahead. 25 the krona does not need to be strengthened, but sweden is still affected by the global imbalances despite the fact that sweden has had a substantial current account surplus for 15 years there is nothing to suggest that this surplus must become a deficit within the near future to see for example lane and milesi - ferretti, 2002. for a more detailed discussion of the long - term development of the krona see lagerwall and nessen, 2009. bis central bankers ’ speeches prevent sweden from accumulating a large net claim in relation to the rest of the world. nor is there anything to suggest that the swedish krona should appreciate in real terms to enable a shift in the current account from a surplus to a deficit. as sweden, as far as we can see, does not have any significant positive net external position, there is nothing to say that the real exchange rate needs to be strengthened for reasons relating to the net position. a general reduction in the global imbalances could, however, have consequences for sweden. apart from the fact that this would reduce the risk of a new international crisis, it would mean that a larger part of global demand would come from those countries that currently have a surplus, for example china, and a smaller part from the united states. it is difficult to know, however, what impact this would have on the demand for swedish export goods. to the extent that chinese households and companies demand different types of goods than households and companies in the united states, this largely depends on whether swedish companies are flexible enough to adapt their production to meet changes in the pattern of demand. the asian countries that have surpluses are a long way from sweden and geo - graphical distance is a factor that has a clear negative link to the propensity of countries to trade with each other. 26 however, there are countries with substantial surpluses that are close to sweden, for example germany. it is therefore not obvious what the overall impact would be on the demand for swedish exports if there was a general reduction in current account surpluses and deficits. it is also conceivable that the united states would import more investment goods if its current account deficit decreased, as this would probably entail an expansion of the export - oriented industrial sector at the expense of the more domestically - oriented service sector. this in turn would entail an increased demand for the type of industrial goods that sweden exports quite a lot of. reduced global imbalances could also en