Governments around the world responded to the economic fallout from the COVID pandemic with unprecedented transfers to households and firms, financing these transfers with large fiscal deficits that will have a long-lasting effect on public debt levels.¹ During this period, private saving rates rose everywhere, and there were important movements in current accounts, including a notable increase in the US current-account deficit (see fig. 1). In this paper, we ask: To what extent were these changes related? How do fiscal deficits affect the world’s balance of payments in the short and the long run?