BIS: Output loss not due to currency collapse

The main finding of the paper was that currency collapses are associated with a permanent output loss, with gross domestic product estimated to be 2–6% lower for three years post-crash. However, the BIS paper pointed out that these losses materialise before the currency collapses, suggesting the economic costs do not arise from currency depreciation per se.

The authors said: "Public authorities tend to resist sharp collapses, presumably because they fear that they would be very costly in terms