If government takes over, it would only mean a transfer of risks, but not elimination. If the conversion would take place directly and en masse on the foreign exchange market, this would almost certainly imply large exchange rate depreciation and possibly other unintended consequences.
Felipe M Medalla: Approaching and taking stock of systemic risk issues from a regional perspective Speech by Mr Felipe M Medalla, Governor of Bangko Sentral ng Pilipinas (BSP, the central bank of the Philippines), at the 23rd Financial Stability Board – Regional Consultative Group for Asia Meeting, Mactan, 16 May 2023. *** The headline [inflation] numbers are high.