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> The typical tool that a nation uses to deal with that reality is the relative value of their currency ... and now that lever will be gone. That lever hasn't
by senko 4y ago
> The typical tool that a nation uses to deal with that reality is the relative value of their currency ... and now that lever will be gone.
That lever hasn't been there in a while. Croatia could never lift the peg to Euro without massive disruption to almost everyone here.
A few years ago, Switzerland lifted its peg. Only a very small number of Croatian mortgages have using CHF at the time (the rates were better then EUR or HRK ones) and the resulting damage was huge (bankruptcies, people's lives' ruined), still having repercussions ot this day.
Compared ot that, virtually all of the mortgages (and other types of loans) are either calculated in Euro or pegged to Euro directly or indirectly. If the peg had ever lifted, you'd have rioters in all the major cities the next day.
- kmlx 4y ago> the resulting damage was huge (bankruptcies, people's lives' ruined), still having repercussions ot this day. same thing happened in other countries in eastern europe. it was a mess, but to me it showed that people don’t really understand what they’re signing.
- throwaway2037 4y agoThis: <<it showed that people don’t really understand what they’re signing.>> It demonstrates that regulation was too weak. They shouldn't have allowed people to borrow huge sums of money (to buy a house) in foreign currency. It was a recipe for disaster.
- kmlx 4y agoi don’t agree with this. it’s essentially up to the people to decide what’s best for them. and i’m sure the lesson has been learned now re. CHF. of course the lesson should have been taught at some point during formal education, but alas. plus, to top it all off, there are countless financial products to isolate yourself from fx fluctuations. it’s just that education is lacking.