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Debt Redemption, Reserve Accumulation, and Exchange Rate Regimes. Laura Alfaro, August 2015, Paper. "Foreign participation in local-currency bond markets in emerging countries has increased dramatically over the past decade. In light of this trend, we revisit sovereign debt sustainability and incentives to default when the sovereign is temporarily excluded from capital markets. Differently from previous analyses, we assume that in addition to accumulating international reserves, countries can borrow internationally using their own currency. As opposed to traditional sovereign debt models (all in foreign currency)..."  Link