The Great Rebalancing

Imbalances and the subsequent deluge of volatile capital flows are widely cited as core contributors to the global financial crisis. Current account imbalances, partly reflecting excess savings in Asia, are commonly cited as a culprit. However, some argue that the rise in cross-border lending, a “global banking glut”, may have been more culpable for the crisis than the “global savings glut”.

Bernanke, Ben S. (2005) “The Global Saving Glut and the U.S. Current Account Deficit“, Remarks at the Sandridge Lecture, Virginia Association of Economists, Richmond, Virginia, March 10, 2005,
Borio, Claudio and Piti Disyatat (2011) “Global imbalances and the financial crisis: Link or no link?” BIS Working Paper 346
Shin, Hyun Song (2011) “Global Banking Glut and Loan Risk Premium” 2011 Mundell-Fleming Lecture

ECB Executive Board member Peter Praet offers an optimistic view on recent structural reforms and the associated rebalancing of domestic and external flows…
The “Great Rebalancing” of the euro area and the global economy, ECB Keynote speech, 30 Nov 2012

Somewhat more pessimistic about EU bank deleveraging is …
Global savings glut or global banking glut? VoxEU, 20 Dec 2011