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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
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International Financial Integration and the External Positions of Euro Area Countries
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- Philip R. Lane1
- Author Affiliations
- 1: Trinity College Dublin, Ireland
- 10 déc 2010
- Bibliographic information
This paper describes the dynamics of the external positions of euro area countries since the formation of EMU. While external imbalances have been the main focus in recent times, current account balances can only be properly interpreted in the context of understanding the overall international balance sheet and the dynamics of the net foreign asset. The creation of the euro represented a fundamental financial shock, whose effects then coincided with a reshaping of the international financial system through important financial innovations and the credit boom and securitization boom that followed. The paper builds a profile of the international balance sheets of euro area countries in order to understand the sources and implications of shifts in net positions over the last decade. It is also considers the gross scale of cross-border holdings. To understand the international risk distribution, the overall position is broken down between equity and debt components. The international currency exposures embedded in the international balance sheets are described. In relation to net flows and net positions, the paper tracks the distribution and persistence of current account balances and net foreign asset positions across the member countries. Furthermore, we document that other factors (such as valuation effects) have been important in the dynamics of the net foreign asset positions, in addition to the contribution made by the cumulative current account position. This working paper relates to the 2010 OECD Economic Survey of the Euro Area (www.oecd.org/eco/surveys/euroarea).
- international investment position, currency exposures, euro area, capital flows
- Classification JEL:
- F21: International Economics / International Factor Movements and International Business / International Investment; Long-Term Capital Movements
- F32: International Economics / International Finance / Current Account Adjustment; Short-Term Capital Movements
- F34: International Economics / International Finance / International Lending and Debt Problems
- F36: International Economics / International Finance / Financial Aspects of Economic Integration