Template-Type: ReDIF-Paper 1.0
Author-Name: Mert Onen
Author-X-Name-First: Mert 
Author-X-Name-Last: Onen
Author-Name: Hyun Song Shin
Author-X-Name-First: Hyun Song
Author-X-Name-Last: Shin
Author-Name: Goetz von Peter
Author-X-Name-First: Goetz
Author-X-Name-Last: von Peter
Title: Overcoming original sin: insights from a new dataset
Abstract: This paper introduces a new dataset on emerging market sovereign bonds, distinguishing between the currency of denomination and the residence of investors. Our dataset is on long-term government bonds and provides a more complete coverage of bonds issued in domestic markets. We document several salient trends. While a preponderance of foreign currency bonds is associated with greater holdings by foreign investors, the correlation is weak at best. Over time, emerging market governments have enhanced their ability to borrow abroad in their own currency, reducing their reliance on foreign currency debt. In this sense, EME sovereigns have made progress toward overcoming original sin. Nevertheless, the greater role of market and duration risk and the activity of foreign non-bank financial intermediaries (NBFIs) mean that emerging markets remain subject to fluctuations in global financial conditions.
Creation-Date: 2023-02
File-URL: https://www.bis.org/publ/work1075.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1075.htm
File-Format: text/html
Number: 1075
Keywords: emerging market economies, sovereign bonds, international lending, international financial markets, foreign investors, original sin
Classification-JEL: F34, G15, H63
Handle: RePEc:bis:biswps:1075