Global Imbalances: Old and New

After more than a decade of narrowing global current account imbalances following the 2008–2009 financial crisis, these imbalances have widened significantly since 2020. This may signal a structural shift in the way savings, investment, and trade flows interact (IMF, 2025). This resurgence of economic divergence revives well-known systemic risks from global macro-financial cycles, such as financial instability, misallocation of resources, or trade tensions (Pinchetti, 2025). There are indeed similarities with previous episodes (Bénassy-Quéré, 2026). However, what distinguishes the current period is not only the magnitude of the imbalance, but also the fact that key contextual factors have changed profoundly: geopolitical tensions have become particularly complex in a multipolar world; and the very nature of globalization has evolved with the development of global value chains, which increase countries’ interdependence while also making the analysis of current account surpluses and deficits more difficult.

What policies?

Macroeconomic research provides clear insights into solutions for global imbalances. At their root lie persistent domestic distortions. In surplus countries, precautionary saving remains high, social safety nets are underdeveloped, and investment is overly concentrated in export-oriented sectors. In deficit economies, reliance on external financing is reinforced by weak private saving and structural fiscal rigidity.

Correcting these imbalances requires more than short-term macroeconomic management: it calls for coordinated, long-term structural reforms. At the multilateral level, policymakers increasingly recognize that external divergences can no longer be explained solely by bilateral trade flows, but rather by macro-financial inconsistencies within a fragmented global system. Without coordination, what begins as a national adjustment failure can turn into global dislocation.

Learning from the Japanese experience: lessons from the Plaza Accord

The Plaza Accord of September 1985 was a historically rare attempt by major advanced economies to address global imbalances through coordinated exchange rate adjustment. However, while it is often presented in Europe as a symbol of the benefits of international cooperation, this interpretation is not universal.

Despite its success in correcting an overvalued dollar, the Plaza Accord did not eliminate underlying global imbalances. In China, the dominant interpretation is that external pressure for exchange rate adjustment weakened Japan’s competitiveness and paved the way for decades of economic stagnation. In the United States, the lesson drawn is rather that external imbalances can be addressed through pressure and political leverage, rather than structural adjustment (Hoshi, 2026).

The major issue is that these divergent interpretations stemming from the US–Japan experience now interact in a particularly destabilizing way in the context of the US–China imbalance. Economic policy is increasingly intertwined with geopolitical rivalry. In this context, differing readings of the Plaza Accord and of US–Japan relations reduce the space for cooperative adjustment.

It is in this context that the joint BdF–FFJ laboratory aims to bring together leading researchers from academia, central banks, and financial institutions to present research on these topics. This collaboration is expected to provide a broader understanding of current dynamics, as well as actionable insights and policy recommendations.

‍