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Domestic Liability Dollarization
Domestic liability dollarization (DLD) refers to the denomination of banking system deposits and lending in a currency other than that of the country in which they are held. DLD does not refer exclusively to denomination in US dollars, as DLD encompasses accounts denominated in internationally traded "hard" currencies such as the British pound sterling, the Swiss franc, the Japanese yen, and the Euro (and some of its predecessors, particularly the Deutschmark). Measurement In developed countries, DLD is defined as Bank for International Settlements reporting banks' local asset positions in foreign currency as a share of GDP. In emerging-market economies (EMs), a proxy measure of DLD is constructed by summing dollar deposits and bank foreign borrowing as a share of GDP. This proxy is based on the assumption that banks match their assets and liabilities by currency type and transfer exchange rate risk to debtors. In other settings, DLD is defined as the share of foreign currency de ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bank For International Settlements
The Bank for International Settlements (BIS) is an international financial institution which is owned by member central banks. Its primary goal is to foster international monetary and financial cooperation while serving as a bank for central banks. With its establishment in 1930 it is the oldest international financial institution. Its initial purpose was to oversee the settlement of World War I war reparations. The BIS carries out its work through its meetings, programmes and through the Basel Process, hosting international groups pursuing global financial stability and facilitating their interaction. It also provides banking services, but only to central banks and other international organizations. The BIS is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City. History Background International monetary cooperation started to develop tentatively in the course of the 19th century. An early case was a £400,000 loan in gold coins, in 1825 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Asset–liability Mismatch
In finance, an asset–liability mismatch occurs when the financial terms of an institution's assets and liabilities do not correspond. Several types of mismatches are possible. An asset-liability mismatch presents a material risk at institutions with significant debt exposure, such as banks or sovereign governments. A significant mismatch may lead to insolvency or illiquidity, which can cause financial failure. Such risks were among the principal causes of economic crises such as the 1980s Latin American Debt Crisis, the 2007 Subprime Mortgage Crisis, the U.S. Savings and Loan Crisis, and the collapse of Silicon Valley Bank in 2023. Currency mismatch For example, a bank that borrows funds in U.S. dollars and lends in Russian rubles would have a significant currency mismatch: if the value of the ruble were to fall relative to the dollar, then the bank would incur a financial loss. In extreme cases, such changes in the value of the assets and liabilities could lead to bankru ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
International Finance
International finance (also referred to as international monetary economics or international macroeconomics) is the branch of monetary economics, monetary and macroeconomics, macroeconomic interrelations between two or more countries. International finance examines the dynamics of the global financial system, international monetary systems, balance of payments, exchange rates, foreign direct investment, and how these topics relate to international trade. Sometimes referred to as multinational finance, international finance is additionally concerned with matters of international corporate finance, financial management. Investors and multinational corporations must assess and manage international risks such as political risk and foreign exchange risk, including transaction exposure, economic exposure, and translation exposure. Some examples of key concepts within international finance are the Mundell–Fleming model, the optimum currency area theory, purchasing power parity, intere ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Original Sin (economics)
Original sin is a term in economics literature, proposed by Barry Eichengreen, Ricardo Hausmann, and Ugo Panizza in a series of papers to refer to a situation in which "most countries are not able to borrow abroad in their domestic currency." The name is a reference to the concept of original sin in Christianity. Original sin hypothesis The original sin hypothesis has undergone a series of changes since its introduction. The original sin hypothesis was first defined as a situation "in which the domestic currency cannot be used to borrow abroad or to borrow long term even domestically" by Barry Eichengreen and Ricardo Hausmann in 1999. Based on their measure of original sin (shares of home currency-denominated bank loans and international bond debt), they showed that original sin was present in most of the developing economies and independent from histories of high inflation and currency depreciation. However, this early study left the causes of original sin as an open quest ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Odious Debt
In international law, odious debt, also known as illegitimate debt, is a legal theory that says that the national debt incurred by a despotic regime should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the government that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion. Whether or not it is possible to discharge debts in this manner is a matter of dispute. History The concept has antecedents dating back to the 1800s and support from diverse fields such as economics, philosophy, political science, history, and law. The concept of odious debt was formalized in a 1927 treatise by Alexander Nahum Sack, a Russian émigré legal theorist. It was based on two 19th-century precedents—Mexico's repudiation of debts incurred by Emperor Maximilian, and the denial by the United States of Cuban liability for debts incurred by the Spanish colonial reg ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
List Of Countries By External Debt
This is a list of countries by external debt: it is the total public and private debt owed to nonresidents repayable in internationally accepted currencies, goods or services, where the public debt is the money or credit owed by any level of government, from central to local, and the private debt the money or credit owed by private households or private corporations based on the country under consideration. For information purposes, several non-sovereign entities are also included in this list. Note that while a country may have a relatively large external debt (either in absolute or per capita terms) it could actually be a "net international creditor" if its external debt is less than the total of external debt of other countries held by it. List of countries by debt See also * Balance of trade * Domestic liability dollarization * List of countries by corporate debt * List of countries by household debt * List of countries by public debt * List of sovereign states b ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Inflation
In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money. The opposite of CPI inflation is deflation, a decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index. Changes in inflation are widely attributed to fluctuations in Real versus nominal value (economics), real demand for goods and services (also known as demand shocks, including changes in fiscal policy, fiscal or monetary policy), changes in available supplies such as during energy crisis, energy crises (also known as supply shocks), or changes in inflation expectations, which may be self-fulfilling. Moderat ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Floating Exchange Rate
In macroeconomics and economic policy, a floating exchange rate (also known as a fluctuating or flexible exchange rate) is a type of exchange rate regime in which a currency's value is allowed to fluctuate in response to foreign exchange market events. A currency that uses a floating exchange rate is known as a ''floating currency''. In contrast, a '' fixed currency'' is one where its value is specified in terms of material goods, another currency, or a set of currencies. The idea of a fixed currency is to reduce currency fluctuations. In the modern world, most of the world's currencies are floating, and include the most widely traded currencies: the United States dollar, the euro, the Japanese yen, the pound sterling, the Australian dollar, and the Swiss franc. However, even with floating currencies, central banks sometimes participate in markets to attempt to influence the value of floating exchange rates. The Canadian dollar has not seen interference by the Canadian nationa ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
External Debt
A country's gross external debt (or foreign debt) is the liabilities that are owed to nonresidents by residents. The debtors can be government, governments, corporation, corporations or citizens. External debt may be denominated in domestic or foreign currency. It includes amounts owed to private commercial banks, foreign governments, or international financial institutions such as the International Monetary Fund (IMF) and the World Bank. External debt measures an economy's obligations to make future payments and, therefore, is an indicator of a country's vulnerability to solvency and liquidity problems. Another useful indicator is the ''net'' external debt position, which equals gross external debt minus external assets in the form of debt instruments. A related concept is the net international investment position (net IIP). Provided that debt securities are measured at market value, the net external debt position equals the net IIP excluding equity and investment fund share ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Debt Of Developing Countries
The debt of developing countries usually refers to the external debt incurred by governments of developing country, developing countries. There have been several historical episodes of governments of developing countries borrowing in quantities beyond their ability to repay. "Unpayable debt" is external debt with interest that exceeds what the country's politicians think they can collect from taxpayers, based on the nation's gross domestic product, thus preventing it from ever being repaid. The debt can result from many causes. Some of the high levels of debt were amassed following the 1973 oil crisis. Increases in oil prices forced many poorer nations' governments to borrow heavily to purchase politically essential supplies. At the same time, OPEC funds deposited and Petrodollar recycling, "recycled" through western banks provided a ready source of funds for loans. While a portion of borrowed funds went towards infrastructure and economic development financed by central govern ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Currency Substitution
Currency substitution is the use of a foreign currency in parallel to or instead of a domestic currency. Currency substitution can be full or partial. Full currency substitution can occur after a major economic crisis, such as in Ecuador, El Salvador, and Zimbabwe. Some small economies, for whom it is impractical to maintain an independent currency, use the currencies of their larger neighbours; for example, Liechtenstein uses the Swiss franc. Partial currency substitution occurs when residents of a country choose to hold a significant share of their financial assets denominated in a foreign currency. It can also occur as a gradual conversion to full currency substitution; for example, Argentina and Peru were both in the process of converting to the U.S. dollar during the 1990s. Name "Dollarization", when referring to currency substitution, does not necessarily involve use of the United States dollar. The major currencies used as substitutes are the US dollar and the euro. Or ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Consumer Price Index
A consumer price index (CPI) is a statistical estimate of the level of prices of goods and services bought for consumption purposes by households. It is calculated as the weighted average price of a market basket of Goods, consumer goods and Service (economics), services. Changes in CPI track changes in prices over time. The items in the basket are updated periodically to reflect changes in consumer spending habits. The prices of the goods and services in the basket are collected (often monthly) from a sample of retail and service establishments. The prices are then adjusted for changes in quality or features. Changes in the CPI can be used to track inflation over time and to compare inflation rates between different countries. While the CPI is not a perfect measure of inflation or the cost of living, it is a useful tool for tracking these economic indicators. It is one of several Price index, price indices calculated by many national statistical agencies. Overview A CPI is ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
