Nagel: Perhaps the turmoil surrounding tapering was even helpful. In what way? Nagel: By reminding market participants not to forget that, sometime in the future, there will be an exit from non-standard monetary policy measures. Cœuré: Yes, it was a useful reminder. Nagel: From time to time we have the feeling that banks are getting too used to these extraordinary circumstances.
Therefore it is important to ensure that foreign capital is used to profitable investment, which will bring returns that can be used to repay the country’s debt. Current account deficits can also signal losses in international competitiveness of an economy, related in particular to excessive increases of costs including unit labour costs.