The current account deficit widened correspondingly, since with a floating exchange rate the current  BIS Review 83/2010  5  account and capital account balances must be equal and offsetting, both being determined simultaneously through the interaction of a wide range of economic and financial forces. The pick-up in net capital inflow meant that the ratio of net foreign liabilities to GDP rose.
From around 20 per cent in 1980, it rose to around 50 per cent by 1995. It then flattened out for a decade, but in recent years the further increase in net capital inflow has seen the foreign debt ratio rise again (Graph 8). Expressing foreign liabilities relative to GDP is, perhaps, the most common way in which people analyse them.