Financial globalization has been one of the most important trends in the world economy in recent decades. This process has involved sharply rising foreign asset and liability positions, whether scaled by GDP or by domestic financial variables (Lane and Milesi-Ferretti 2003, Obstfeld and Taylor 2004). In addition to larger gross positions, financial globalization has also allowed a greater dispersion in net foreign asset positions, with a significant number of countries emerging as either large net creditors or net debtors (Lane and Milesi-Ferretti 2002a). In general, financial globalization is one of the key trends that has reshaped the global economy relative to the environment envisaged by the designers of the Bretton Woods system in 1944 and understanding its macroeconomic implications is crucial in formulating a view on the appropriate future direction for the international monetary system.

Sixty Years After Bretton Woods