" (2008)

It is also reported that the companies and banks are hurting in all economies that are "dollarized" economies" or those in which devaluation of the Dollar is occurring in recent years. While high Dollar inflows first drive growth and production, the capital inflows tend to hurt banking profitability when governments try to "mop up" excessive liquidity and sterilize Dollar inflows in exchange for low-yielding government bonds. China's banks, for example, are already getting a raw deal on their Dollar assets because the government forces them to accept low-yielding, negative real interest government bonds in exchange. When recession strikes, these banks will become even more unwilling to provide credit to their ailing (export industry) customers. Unfortunately, even if the Dollar gets stronger, as is often the case during a global crisis, falling domestic currencies might easily deepen a looming crisis of confidence - as they did during the Asian...
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