Currency Mismatch
A balance-sheet condition in which a borrower has liabilities denominated in one currency (typically dollars) and revenues or assets denominated in another (typically local currency). Currency mismatch is the central balance-sheet fragility in EM crisis dynamics: a 25-percent local-currency depreciation translates mechanically into a 33-percent increase in the local-currency cost of servicing dollar debt, often pushing leveraged borrowers into default. The pattern is at the core of every major EM crisis since the 1990s and is the primary reason currency depreciations cause real-economy damage in EMs that they would not cause in reserve-currency issuers.
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10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
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