In a monetary union like the United States or the  2  See Box 13 in the June 2007 issue of the ECB Monthly Bulletin entitled “Is the downward impact of globalisation on import prices waning?”  3  There are, however, other factors – independent of globalisation – that can help to explain the decline in global inflation, such as rapid technological progress and structural reforms.
6  BIS Review 83/2010  For a developed economy that can borrow overseas in its own currency, and which has a floating exchange rate, the significance of a rise in the ratio of foreign liabilities to GDP is less clear. It also needs to be kept in mind that, as economies develop, most financial variables rise relative to GDP.