Consequently, the need for balancing current accounts in the world has gained ample acceptance. A potential dangerous outcome of this prescription is a movement toward protectionism and the implementation of a variety of distortive measures.
Some of this has been evidenced in the capital controls imposed by some emerging economies experiencing currency appreciation.5 As for sovereign risk, the unsustainable path of certain euro member countries’ public debt has threatened the stability of the European Monetary Union (EMU).