2  BIS Review 27/2004  is equal to its current account balance, such balances, positive or negative, with the exception of the mid-1980s, were therefore generally modest. But in the early 1990s, “home bias” began to diminish appreciably,3 and, hence, the dispersion of current account balances among countries has increased markedly.
The widening current account deficit in the United States has come to dominate the tail of that distribution of external balances across countries. Thus, the decline in home bias, or its equivalent, expanding globalization, has apparently enabled the United States to finance and, hence, incur so large a current account deficit.