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In principle as long as they have foreign reserves in excess of the gross foreign-currency liabilities of their domestic economy, they're okay. This, of course, requires them to gradually devalue their currency if and as they accumulate a current account deficit.

In practice, there may be the issue of liability dollarization. (That's part 2 of a 3-part series: part 1, part 3)

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Sep 9th, 2014 at 10:40:33 AM EST
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