In Stage Three of a financial crisis in an emerging market economy,the currency mismatch refers to ________.

Question

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In Stage Three of a financial crisis in an emerging market economy, the currency mismatch refers to the fact that most debt in these economies is denominated in U.S. dollars. This creates a problem when the value of the local currency depreciates rapidly, making it difficult for borrowers to repay their debts in the stronger U.S. currency. This can lead to defaults and further exacerbate the financial crisis.

In Stage Three of a Financial Crisis in an Emerging