Just as there is a sudden stop of the flow of blood in the latter, in the former there is a sudden stop in capital flow into an economy (or sudden withdrawal of capital). Neither is precisely predictable -- if enough of the symptoms are visible, then a sudden stop is likely being experienced. For example, a recent analysis by The Economist judged that Bangladesh is not at risk of an imminent currency crisis. What exactly happens in a “sudden stop” currency crisis? When it comes to a sudden stop crisis, institutions and politics can matter as much as specific policies or data.

Source: Dhaka Tribune May 08, 2020 03:45 UTC