For one thing, it is folly to think that more local currency debt eliminates the possibility of a financial crisis.

Governments may be able to mobilize funding through debt swaps, where donors exchange debt for local currency investment in environmental protection, such as waste water treatment.

But, as these investments bolster economic growth, increased tax revenues would imply more sustainable financing, as would local governments ability to leverage land markets and approach local currency debt markets.

Local currency government debt markets have performed fairly well during the crisis, while local currency corporate debt markets have played a more modest role as a vehicle for longer term finance.

They have also paid back a significant share of external debt and converted much of what remains into more manageable local currency liabilities.

All organizations whose expenditures, like those of the secretariat, are predominantly incurred in local currency experience problems arising from exchange rate fluctuations.

Some 18 Governments increased their contributions to regular resources in local currency and 14 increased by 7 per cent or more.

The exchange rate explains part, but not all, of the increase, since 13 countries actually increased contributions in local currency.

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That is why, for domestic debt disputes, countries have bankruptcy laws and courts.

By transferring their right to print money to the European Central Bank (ECB), member countries exposed themselves to the risk of default, like Third World countries heavily indebted in a foreign currency.

But domestic savings remain low in the face of persistently high levels of public debt.

Seventeen donor countries and EU increased their contributions in 2003.7 Of the countries that registered increases in funding levels, three countries had actually decreased their contributions in terms of their local currency, but showed an increase in terms of the United States dollar.

But when local governments are barred from debt finance, they look for other means.

Second, domestic de leveraging dynamics are aggravating other structural impediments.

Now China is experiencing a fourth instance of elevated debt risk, this time characterized by high levels of accumulated local government and corporate debt.

Debts incurred by local government investment vehicles (LGIVs) totaled almost 5 trillion 46.4 of overall debt.

That is why, for domestic debt disputes, countries have bankruptcy laws and courts. But there is no such mechanism to adjudicate international debt disputes.

As a result, domestic non financial sectors do not face the prospect of deleveraging.

My Canadian colleague Mark Kamstra and I have proposed issuing shares called trills, which would pay a dividend each year equal to a trillionth of that year s GDP, in domestic currency.

Under direction of Chief of Finance, administers the mission apos s U.S. dollar account and other local currency accounts, attends to banking matters on behalf of the mission, and other related duties.

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Local governments have also accumulated massive amounts of non explicit debt through arrears, credits, and guarantees.

An integrated asset liability structure is needed that also encompasses domestic debt and off balance sheet items.

In 2011, local government debt totaled 10.7 trillion ( 1.7 trillion), with only 54 of more than 2,500 county governments debt free. Debts incurred by local government investment vehicles (LGIVs) totaled almost 5 trillion 46.4 of overall debt.

The Bank should be able to work with them in the absence of sovereign guarantees, and increase its loan offerings in local currencies, since these partners cannot afford currency risk. To further crowd in the private sector, insurance and guarantees can help.

Provision is made for a daily allowance for incidental personal expenses to be paid to up to 1,273 military personnel for a total of 207,698 troop days at a rate of 1.28 per troop per day, payable in local currency.

Upon signature, the former Czechoslovakia declared in accordance with article 26 the formula for converting the amounts of liability referred to in paragraph 2 of that article into the Czechoslovak currency and the amount of the limits of liability to be applied in the territory of Czechoslovakia as expressed in the Czechoslovak currency.

And a stronger economy would help domestic banks by reducing potential bad debt and mortgage defaults.

But the impact has been limited, owing to the authorities ability to stuff debt down the throats of captive local banks, insurance companies, and pension funds.

United States Treasury Secretary Timothy Geithner has already accused China of currency manipulation.

National narratives are, indeed, a type of currency.

In this context, IMF has been advising developing countries to develop domestic bond markets to raise funds through long term fixed interest securities denominated in the local currency as an alternative to borrowing from abroad.

As a result, they turned to land transfers and debt financing, exacerbating the problem of soft budget constraints.

The risk stemming from local government debt is exacerbated further by massive amounts of non explicit debt acquired through arrears, credits, and guarantees.

Even so, a depreciated rupee will increase the burden of repaying foreign debt, and deepen the woes of domestic companies and banks.

Local governments are saddled with a mountain of debt and wasted investments, banks accumulate risky loans, and farmers lose their land.

Over and above these problems, we face mounting domestic and external debt, an unfair and inequitable global trading system and the prevalence of conflicts and political instability.

It is to be noted that in many HIPCs the implementation of the Initiative has not contributed to a real alleviation of the budgetary burden, because debt relief results in a swap of fiscal expenditures in domestic currency.

What does this imply for Europe s austerity debate? If foreign debt matters more than public debt, the key variable requiring adjustment is the external deficit, not the fiscal deficit.

The first message will resonate with those who believe that a key lesson of the Asian crisis a decade ago is that countries opened themselves to certain types of flows especially foreign currency debt before they were ready.