Having a proper understanding of countries’ external positions—current accounts, stock positions, and currencies—is critical to highlight policymakers’ shared responsibility to tackle external imbalances before they become too risky. External imbalances are not necessarily a cause for concern, as there are good reasons for countries to run deficits and surpluses at certain points in time. For example, it is natural for young, fast growing economies to run deficits and borrow from aging advanced economies with weaker growth potential. But just as over-indebted households may lose access to credit if their earnings ... (full story)