A third possibility is that the so-called "home bias" in international saving-investment choices is gradually eroding.10 In this view, globalization has generally reduced the barriers to international asset diversification, and we are witnessing a rebalancing of wealth portfolios which, in the transition, can lead to persisting current account deficits or surpluses.
It is very difficult to tell which of these explanations, or some combination of them, is on the mark and whether there are unknown fourth or fifth explanations. In each case there is an international self-interest argument to explain the situation, and it is difficult to assess the durability of this self-interest.