"And they need to put firms with foreign borrowings through administration to get rid of the foreign debt."
Though I totally understand the idea, I however think it is easier said than done.
Turkish ( or any other country) companies have the same issue: low us interest rates and common sense applied here: they took advantage of the situation by borrowing in US dollar.
There was nothing much the Turkish government could do about that.
"There was nothing much the Turkish government could do about that."
They can. They can change the "trading while insolvent" rules so that it is in all currencies the firms deals with, not just the reporting currency.
Then if you can't get the forward swaps, the firm is insolvent and has to be put through administration - which will wipe out the dollar debt rather than cause a wave of Lira for dollar selling.
Capitalism without bankruptcy is like Catholicism without hellfire. It stops the control system working.
My point was referring to any companies from emerging countries who need assess to finance ( exporting into the US or Europe which is the case for many Turkish company). Not only the ones being insolvent. They assesment is made at the entity level. The macro effect is not taken into account by them.
Though I totally understand the idea, I however think it is easier said than done.
Turkish ( or any other country) companies have the same issue: low us interest rates and common sense applied here: they took advantage of the situation by borrowing in US dollar.
There was nothing much the Turkish government could do about that.