Financial Risk Manager Part 2
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In comparing foreign currency defaults and local currency defaults, which of the following statements is correct?
A
Foreign currency defaults typically occur due to constraints on printing currency, while local currency defaults happen when countries lack the ability to print more currency.
B
Foreign currency defaults involve debt denominated in the country's own currency, while local currency defaults occur when there are shortages of the foreign currency to meet obligations.
C
Local currency defaults can occur even when countries can print more local currency, while foreign currency defaults are primarily driven by deliberate trade-offs between default and currency debasement.
D
Local currency defaults primarily occur due to foreign currency shortages, while foreign currency defaults may happen despite the ability to print more currency.