However, so long as risk aversion exists and trust is enhanced by local familiarity, we cannot expect that home bias will fully dissipate. Nevertheless, is globalization at least reducing home bias toward its minimum level? Survey data collected in the United States suggest a large swing toward foreign investment.
Moreover, measures that support investor confidence also support the proper functioning of the financial system. For instance, TARGET2 data suggests that balances have now fallen slightly from their peak in August. This highlights the fact that if investors are confident that adverse scenarios will not materialise, they will be more prepared to make cross-border loans.