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Kornél Kisgergely

received a Master in Economics in 2006 from the Corvinus University Budapest, completed the CFA program in 2013. Between 2007 and 2011 he worked for the central bank of Hungary as a researcher and policy advisor to the Monetary Council. His research focus was financial markets and Bayesian VARs. Currently he works for the government as a deputy secretary of state. His portfolio consists of financial regulation and analysis, public debt financing, macroeconomic forecasting and international economic affairs. He is president of the board of directors at the Hungarian Debt Management Agency, member of the Economic Policy Committee, Hungarian governor of MIGA and deputy governor of EBRD.

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Public debt financing in foreign currency: A practitioners views

Emerging market sovereigns used to finance themselves in hard currency due to credibility problems. This made them extremely vulnerable to sudden devaluations of their national currencies. Since the Asian financial crisis these countries made remarkable progress in developing local currency debt markets. Thus the share of foreign currency in their public debt portfolio has shrunk significantly. Hungary has recently put more emphasize on this goal in its debt management strategy. Contrary to the conventional wisdom foreign currency financing is not only much riskier, but also more expensive than local, taking into account sterilization costs as well. However, there are limits of local currency financing because of original sin type of problems and external reserve requirements.

Last modified: 2018.11.30.