ratio of the sum of external assets and liabilities to gdp. for germany, the degree of financial openness in 2004 amounted to around 300 % – three times higher than in 1990. for the united states and the united kingdom, this indicator roughly doubled in the same period. owing to the particular role of london as an important international financial centre, the united kingdom showed a degree of financial openness of more than 700 % in 2004. globally integrated financial markets are expanding the investment spectrum, reducing capital costs and contributing to greater market liquidity, price efficiency and risk distribution. along with the advancing integration of the financial markets, investors ’ “ home bias ” will probably continue to diminish, too. this, in turn, will reinforce the convergence process and facilitate the cross - border allocation of savings. see bis ( 2005 ), triennial central bank survey, foreign exchange and derivatives market activity in 2004. ii global savings flows right here there should be a moment ’ s pause for thought as we have come to a crucial point. we have to look at global imbalances from two angles – first, from the perspective of the current account balance and, second, in terms of the balance between saving and investment. ultimately, these are two sides of the same coin : countries with a current account deficit absorb savings from abroad and countries with a savings surplus transfer resources abroad. the scale we are dealing with here is revealed by looking at the global current account structure. the us current account deficit last year of us $ 805 billion – 6. 4 % of gdp – stood in contrast to current account surpluses of us $ 164 billion in japan, us $ 159 billion in china and a further us $ 86 billion in some asian emerging economies, and us $ 259 billion in the opec countries. the euro area was running a current account deficit equivalent to us $ 28 billion. however, looking briefly only at the german current account, it is plain to see that germany, too, with a surplus of us $ 115 billion ( €92 billion, 4. 1 % in relation to gdp ), provides net savings to other countries on a large scale. in macroeconomic terms, this reveals that – unlike in the 1990s – domestic saving in germany has no longer been fully absorbed by domestic aggregate fixed capital formation. at 2¾ % to 3 % of disposable income in the period from 2002 to 2005, the overall net investment ratio was very low compared to the first half of the 1990s,

fdi, which at present probably still differ in favour of the united states, may also converge in the medium term. second, the positive sign of the investment income balance conceals the fact that it has been falling steadily in relation to gross flows since the early 1980s. in 1980, it accounted for more than 40 % of total us income from investment abroad, while, in 2005, it was less than 2 %. this means that, today, see ecb ( 2006 ), the accumulation of foreign reserves, occasional paper series no 43, february 2006. see hausmann, r / sturzenegger, f ( 2006 ), global imbalances or bad accounting? the missing dark matter in the wealth of nations, harvard university, cid working paper no 124, cambridge ma. see cline, w ( 2005 ), the united states as a debtor nation, washington dc, sowie gourinchas, p o / rey, h ( 2005 ), from world banker to world venture capitalist : us external adjustment and the exorbitant privilege, presented at the nber conference on g7 current account imbalances : sustainability and adjustment. see imf ( 2005 ), loc cit. comparatively small changes on the income or expenditure side can have far - reaching effects on the net income statement. 13 third, even with us investors enjoying constant yield advantages, an increase in borrowing costs could push us net interest income into deficit. given the credit liabilities 14 of around us $ 3. 6 trillion net shown at the end of 2004, a 1 percentage point increase in the global interest rate level over the entire maturity range would lead to an additional net interest burden of us $ 36 billion. 15 that would be the case at least in the long run if the higher interest rate level affects all assets and liabilities. it would eat up the 2005 interest income balance, which was no more than us $ 7. 4 billion. in the final analysis, the “ dark matter ” theory does not provide a compelling reason why the usa and, with it, the world economy should be immune to risks of persistently large current account deficits. v implications coming to the policy implications, let me first note that globalisation by no means automatically gives rise to imbalances. in the past few years, what we have been dealing with is the advancing process of globalisation coinciding with a particular set of factors that have contributed to the emergence of global imbalance