Bank of Canada Governor Tiff Macklem cites China’s export surplus and US capital reliance as key drivers of widening imbalances.
Bank of Canada Governor Tiff Macklem warned that rising global imbalances, driven by China’s export surplus and US dependence on foreign capital, could increase financial stability risks. These imbalances have widened again after easing post-2008 financial crisis, with some nations running large surpluses while others rely on borrowing and spending.
Macklem noted that cross-border capital flows, while beneficial, can distort asset prices and fuel protectionism when excessive. He highlighted concerns over one-way capital movements, particularly into artificial intelligence and infrastructure, which may create asset bubbles similar to past financial crises.
The remarks come amid heightened trade tensions, including US tariffs aimed at reducing trade deficits, which have disrupted global trade flows and increased protectionist measures.