Original Sin
A term coined by economists Eichengreen, Hausmann, and Panizza to describe the inability of most emerging-market countries to borrow internationally in their own currency. The original-sin problem forces EM sovereigns and corporates to take on currency-mismatched dollar or euro debt, which becomes catastrophically more expensive to service when the local currency depreciates -- the mechanism that turns moderate FX moves into balance-sheet earthquakes in sudden-stop episodes. Reducing original sin (deepening local-currency debt markets) is a long-running policy priority for EM authorities.
Lessons that use this term
Related terms
10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
Open this term in the app → — no account needed; browse the full glossary while you research.