Spanish trade deficit and reasons for international central banking

Résumé

Being a net importer of goods and services, Spain has incurred a series of trade deficits which has led to the increase in its gross external debt. Official balance-of-payments (BoPs) data show that the rise in Spain’s debt is only partially justified. The sum of current account deficits and the variation in foreign exchange reserves from 2005 to 2017, for instance, does not fully explain the change in Spain’s gross external debt position. Such problem is common to all net importing countries. The analysis of international payments indicates that such finding is due to the current architecture of the international monetary system and, in particular, to the lack of international central banking or a multilateral system of settlement and clearing. This chapter deals with these issues and calls for a full monetary integration between Spain and other countries through the intermediation of a bank for international settlements.