Original Sin
Version 1.0.0 · Updated 2026-07-30
CORE DEFINITION
A concept proposed by economists Barry Eichengreen and Ricardo Hausmann, referring to the phenomenon that developing countries are unable to borrow in international markets in their own currency. These countries are forced to issue debt in foreign currencies, thereby facing exchange rate risk and vulnerability to currency crises.
SCAFFOLDING EFFECT
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Analysis of the international financial system. It reveals the structural asymmetry in the international financial system, explains why developing countries are more susceptible to financial crises, and provides an important framework for understanding the flaws of the international monetary system.
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Eichengreen and Hausmann point out that due to insufficient institutional and currency credibility, developing countries can only borrow internationally in foreign currencies. When exchange rates fluctuate, the real burden of debt increases sharply, forming structural vulnerability—this is the 'original sin' of the international monetary system.
MINIMUM ACTION
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Source support: Explicit
- en.wikipedia.orghttps://en.wikipedia.org/wiki/Original_sinverified
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