The international deficit that determines the growth or decline in a country's international liability ratio is the trade deficit, and there are few cases of countries running large-scale trade deficits for more than four or five years. By this standard, the U.S. borrowing spurt should have ended a long time ago.
For foreign economies, the wide use of the dollar allows borrowers to have access to a broad pool of lenders and investors, which reduces their funding and transaction costs. The benefits of the dollar as the dominant reserve currency have generated an extensive academic literature. Yesterday’s paper on the Treasury market by Alexandra Tabova and Frank Warnock extends that work in meaningful ways.