More on the U.S. as a Banker to the World
I have a new article where I make the case that the U.S. financial system acts as a banker to the world: it tends to issue safer assets to foreigners while acquiring claims to riskier assets abroad. As a result, the United States’ balance sheet with the rest of the world looks like a bank’s balance sheet. This banker-to-the-world role has becoming even more important over the past few decades as the financial integration of the world economy has not been matched by a proportional deepening of financial markets. This is not a novel idea. Charles Kindleberger f irst made this point in 1965. Subsequent work by Gorinchas and Rey (2007) , Caballero et al. (2008) , Caballero and Krishnamurthy (2009) , Mendoza et al. (2009) , Forbes (2010) , He et al. (2016) , Gourinchas et al. (2017) , Matteo (2017) , Krishnamurthy and Lustig (2019) , and others all build on this point. Here is my own contribution to this debate. So while some may find this view surprising, it is actually ...