My earlier comments on the global saving glut hypothesis focused on the sources of the capital inflows to the United States and their effects on global longer-term interest rates and the U.S. current account, without attention to the composition of those flows.
They also complicate the orderly resolution of major financial firms in the event of failure.12 Indeed, precisely because an effective orderly resolution mechanism provides for continued funding of certain short-term creditors to staunch potentially calamitous runs, that type of funding will not be subject to the increased market discipline resulting from the creation of a credible resolution process.