The international dimensions of credit growth pose specific policy challenges (Borio et al (2011)). First, in economies experiencing booms, international credit often complicates the job of domestic authorities who seek to monitor and to constrain credit. For example, domestic authorities have several tools to slow the growth of credit extended by banks within their jurisdiction. But short of capital controls, the tools to measure, much less to control, credit extended by institutions outside the country are limited. Second, local firms and households may shift out of domestic currency liabilities (“liability dollarisation”) in an attempt to avoid tightening in monetary conditions imposed by the home This not only.
