8 ms·
More importantly than being the world’s reserve currency is having the debt denominated in your own currency. For instance, during the housing bubble, Icelander
by pmart123 8y ago
More importantly than being the world’s reserve currency is having the debt denominated in your own currency. For instance, during the housing bubble, Icelanders took mortgages out in GBP, Eastern Europe’s took mortgages out in CHF. In these situations, you can’t just print your way out of the debt.
- xchaotic 8y agoI am an unfortunate victim of that situation (banks would lend in local currency but would lend in CHF). It turns out banks didn't actually go and buy CHF to give you, it's just the way the loan was written as what ended up in developers bank account was local currency anyway. So in that specific situation it was entirely possible for a gov to intervene without resorting to buying foreign currency. In my country they still didn't, in Hungary they did.
- platz 8y agothat does make some sense