One polar view is that the external deficits and debt that are the result of decisions of the private sector – and not due to government borrowing – are of little concern to policymakers. Such a view may be taken by industrial countries since their access to international liquidity at zero risk spreads is normally assured.
However, for emerging economies there are some arguments in favour of national balance sheet and national liquidity. Large net borrowings by some entities in the economy tend to increase country risk premia and thus raise the interest rate charged to all borrowers.