A sudden stop will be easier to navigate if the country borrows internationally in foreign currencies and lend locally in its domestic currency.

Question

Quizplus · Accepted Answer

Borrowing in foreign currencies while lending in domestic currency can exacerbate a sudden stop, as the country would need to find foreign currency to repay its debts, which can be difficult if its currency depreciates or if it faces capital outflows.

A Sudden Stop Will Be Easier to Navigate If the Country