TY - BOOK ID - 84783824 TI - Floating with a Load of FX Debt? AU - Kliatskova, Tatsiana. AU - Mikkelsen, Uffe. PY - 2015 SN - 1498309429 1513574140 1513522507 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Banks and Banking KW - Foreign Exchange KW - International Lending and Debt Problems KW - Central Banks and Their Policies KW - Interest Rates: Determination, Term Structure, and Effects KW - Development Planning and Policy: Trade Policy KW - Factor Movement KW - Foreign Exchange Policy KW - Currency KW - Foreign exchange KW - Banking KW - Exchange rate adjustments KW - Exchange rates KW - Central bank policy rate KW - Exchange rate policy KW - Financial services KW - Interest rates KW - Colombia UR - https://www.unicat.be/uniCat?func=search&query=sysid:84783824 AB - Countries with de jure floating exchange rate regimes are often reluctant to allow their currencies to float freely in practice. One reason why countries may wish to limit exchange rate volatility is potential negative balance sheet effects due to currency mismatches on the balance sheets of firms and households. In this paper, we show in a sample of 15 emerging market economies that countries with large foreign exchange (FX) debt in the non-financial private sector tend to react more strongly to exchange rate changes using both FX interventions and monetary policy. Thus, our results support the idea that an important source of “fear of floating” is balance sheet currency mismatches. This effect is asymmetric; that is, countries stem depreciation but not appreciation pressure. Moreover, FX debt financed through the domestic banking system is more important for fear of floating than FX debt obtained directly from external sources. ER -