01806cas a2200241 a 4500 AALejournalIMF001290 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451854480 1018-5941 BD-DhAAL BD-DhAAL Sobolev, Yuri. Exchange-Rate-Based Stabilization : A Model of Financial Fragility / Yuri Sobolev. Washington, D.C. : International Monetary Fund, 2000. 1 online resource (36 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Interactions between banks and open capital account are investigated as rationalizations for empirical regularities characterizing disinflation programs anchored by the exchange rate. The financial system is characterized by bank dominance and lending externality - banks do not internalize the effect of their lending on other banks' information about potential borrowers. Model dynamics simulation shows that remonetization in the wake of disinflation increases loanable funds supply and translates into bank credit expansion financed by capital inflows. A credit-driven boom results, accompanied by overvaluation and current account deficits generating financial fragilities and vulnerability to a shock that can trigger banking and balance-of-payments crises. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2000/122 Full text available on IMF http://elibrary.imf.org/view/journals/001/2000/122/001.2000.issue-122-en.xml IMF e-Library