Borrowing in one's own currency has many advantages for low-income nations (such as Chile). Which of the following is NOT an advantage?
A) Service payments are usually retained in the nation.
B) Defaults are typically not an issue.
C) The nation is never obliged to repay-it can roll over the debt in perpetuity.
D) More national debt actually helps credit markets deepen and mature.

Question

Quizplus · Accepted Answer

Being never obliged to repay the debt and rolling it over perpetually is not an advantage as it can lead to a debt trap where the country ends up paying more in interest than the amount borrowed, eventually leading to a financial crisis.

Borrowing in One's Own Currency Has Many Advantages for Low-Income