{"id":66365,"date":"2020-10-10T11:40:22","date_gmt":"2020-10-10T06:10:22","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=66365"},"modified":"2021-04-21T16:21:38","modified_gmt":"2021-04-21T10:51:38","slug":"short-term-borrowings-during-global-financial-crisis","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/short-term-borrowings-during-global-financial-crisis\/","title":{"rendered":"Short term borrowings during Global Financial Crisis (GFC) are not good"},"content":{"rendered":"

Foreign borrowings<\/span><\/b>\u00a0include the money borrowed by a government or private corporation<\/span>s<\/span>\u00a0from another country’s government<\/span>, global institutions<\/span>\u00a0or private lenders.<\/span> Short term borrowing can put undue pressure on the balance of payments of a country at a time when the global <\/span>financial<\/span>\u00a0crisis<\/span>\u00a0(GFC)<\/span>\u00a0has already hit the forex reserve income<\/span>.\u00a0<\/span>Therefore, a<\/span>\u00a0lower or nil short-term foreign\u00a0<\/span>debt is<\/span>\u00a0advantageous in times of GFC.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

Opening up of fore<\/span>ign banks during a Global Financial Crisis (GFC)<\/strong> could expose the domestic economy to the externalities of the global market. Furthermore<\/span>, while foreign banks can lower the cost of financial services and reduce solvency risks, they also<\/span>\u00a0increase credit risk and the potential for capital flow volatility<\/span><\/b>. This\u00a0<\/span>volatility<\/span>\u00a0may further<\/span>\u00a0<\/span>damage the domestic <\/span>financial<\/span>\u00a0market<\/span>\u00a0<\/span>in times of GFC due to its exposure to foreign banks.<\/span>\u00a0<\/span><\/p>\n

Maintaining full capital account convertibility is not likely to give immunity to India from the global financial crisis. <\/span>Convertibility\u00a0<\/span><\/b>is the ease with which a country’s currency can be converted into gold or another currency through global exchanges.<\/span>\u00a0Capital account convertibility refers to the freedom to convert local financial assets into foreign financial assets and vice-versa. Currently, there are limitations to how much capital can flow in and out of India. So, India’s capital account is only partially convertible.<\/span>\u00a0A full capital account\u00a0<\/span>convertibility<\/span> in times of a GFC would lead to an unrestricted\u00a0<\/span>outflow of capital<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Foreign borrowings\u00a0include the money borrowed by a government or private corporations\u00a0from another country’s government, global institutions\u00a0or private lenders. Short term borrowing can put undue pressure on the balance of payments of a country at a time when the global financial\u00a0crisis\u00a0(GFC)\u00a0has already hit the forex reserve income.\u00a0Therefore, a\u00a0lower or nil short-term foreign\u00a0debt is\u00a0advantageous in times of… Continue reading Short term borrowings during Global Financial Crisis (GFC) are not good<\/span><\/a><\/p>\n","protected":false},"author":10308,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-66365","post","type-post","status-publish","format-standard","hentry","category-economy-2","entry"],"jetpack_featured_media_url":"","views":{"total":122,"cached_at":""},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/66365","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10308"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=66365"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/66365\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=66365"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=66365"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=66365"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}