apos;s Latin America Research Group in conjunction with the Federal Reserve shows that interest rates in Latin America skyrocketed in the wake of the Asian financial crisis in the fall of 1997, again following the Russian default in August 1998, and again in January 1999 as Brazil devalued its currency. The chart shows the spread between selected Latin American bond yields and comparable yield on U.S. instruments. An increase in the spread indicates that investors allotted an increased risk to holding Latin American debt. Dollarization arguably could reduce this spread to nearly zero because the threat of devaluation and the resulting press
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