As a consequence, “home bias” will likely continue to constrain the movement of world savings into its optimum use as capital investment, thus limiting the internationalization of financial intermediation and hence the growth of external assets and liabilities and the dispersion of world current account balances that such growth implies. Nonetheless, during the past decade, home bias has apparently declined significantly.
What do you think of the idea of banks merging, of banks that are in poor health hoping that a merger will help them to survive? Do you think that is a good way forward?