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Latin America's original sin: Hard loans, soft currences

Prominent financial, banking and economic experts will examine why emerging market countries cannot borrow in their own currencies, how this relates to market instability and how to ease these nations’ debt burden at a November 21-22 conference at the Inter-American Development Bank in Washington, D.C. titled: Currency and Maturity Matchmaking: Redeeming Debt from Original Sin.

Increasingly, analysts are pointing an accusing finger at the inability of most emerging markets to denominate their foreign debt in local currencies or to borrow long-term at fixed rates in local currencies, even at home. They argue that this “original sin” creates currency and maturity mismatches that are at the core of economic problems faced by emerging markets.

The conference is being organized jointly by the IDB and two institutions at Harvard University, the Center for International Development and the David Rockefeller Center for Latin American Studies, in cooperation with the University of California at Berkeley. The forum will feature presentations by economists, analysts, and academics from universities, the private sector, government, the International Monetary Fund and the IDB.

IDB Chief Economist Guillermo Calvo will deliver opening remarks at 9 a.m. on Thursday, Nov. 21. Harvard University Prof. Richard Hausmann, who served as the IDB’s first chief economist from 1994 to 2000, will close the conference at 4:30 p.m. Friday, Nov. 22.
U.S. Treasury Assistant Secretary for Economic Policy Richard Clarida will give a luncheon* talk on the first day of the conference.

Papers and panels presented during the conference will tap into the expertise of market participants, policymakers and the international community as they all seek to uncover the causes of today’s unstable markets and suggest ways to strengthen the financial system and ease the debt structure of developing countries.

*The luncheon is by invitation only

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