By definition, a country’s current account balance is equal to a country’s exports minus its imports. This includes not only goods, but services as well. Countries like the United States and Great Britain run a HUGE current account deficit, meaning we import a lot more than we export. On the opposite end of the spectrum are countries like China and Japan who export much more than they import. These countries are said to have a current account surplus. Since these countries who export a lot to the US are generally paid in dollars, they hold vast amounts of US dollars in their foreign currency reserves. In 2008, at the tipping point of the global financial crisis, it was estimated that China held over one trillion US dollars in their reserve. That’s $1000 for each Chinese citizen!
Published by Karim Varela
An entrepreneur and mobile enthusiast at heart, Karim is currently the CTO at Coffee Meets Bagel where he's building out and managing a world-class engineering team to handle a global, web-scale dating application. He was also part of the engineering teams which built Tinder and Fandango. He's earned an MBA from the University of Florida and a bachelor's degree in computer science from the University of California. He was a tech reviewer for the book Pro Android 4 and a co-author for the book Instant GSON. Also, he's the founding member of the San Francisco CTO Support Group. View all posts by Karim Varela