Global imbalances have finally made it on to the agenda of the Group of 20 summit. It looked for a while as though the world's most powerful leaders, obsessed with the minutiae of banking regulation, would turn themselves into the political wing of the Basel committee. We are still a long way away from dealing with the underlying causes of the crisis in an effective manner, but at least there is now an official recognition that the crisis is not just about financial regulation and supervision, but that it has deeper roots in global macroeconomic policy.

Why do we need such an agenda? The reason is that large and persistent imbalances drive ever larger capital flows, which can destabilise the global economy. Since current account surpluses denote an excess of national savings over investments, this excess has to be either invested abroad directly, or it piles up at home in the form of foreign currency reserves, which are then rerouted into the global capital markets. Without excessive imbalances, the demand for products we now refer to as toxic assets would have been smaller.

Not everyone has signed up to the idea. It is perhaps no surprise that countries with persistent current account surpluses are sceptical. Angela Merkel, the German chancellor, warned that global imbalances were an “ersatz” issue, which served to deflect from the real agenda, by which I presume she meant the regulation of bonus payments. I never cease to be amazed how her coalition managed to frame this complex financial crisis purely in terms of Anglo-Saxon greed. When you are holding on to such a convenient narrative, you do not want to answer awkward questions about imbalances.