To a great extent, continuation of the current account deficit depends on the willingness of investors to provide financing. One factor that will influence their willingness is the rate at which U.S. dollar assets are increasing in global portfolios relative to other assets.
The ECB’s experience is part of an emerging global consensus that central banks need to embrace new tools and frameworks: the unconventional measures put in place since the crisis, particularly if combined in a policy mix, help compensate for the reduced scope for conventional rate cuts, at least in part.