The fear of letting the exchange rate appreciate, so as not to damage the sector exposed to international competition, leads to an overheating of economic activity that may inflate a bubble not unlike the pre-crisis one in developed countries. The risk is that, by maintaining the currency link with the developed countries, the emerging countries import financial instability.
The accumulation of international reserves can offer a partial protective buffer, but it won’t necessarily be sufficient to avoid the repercussions on the real economy. BIS Review 82/2010  39  Europe and the United States would both benefit from a better functioning world economy, but they depend on decisions taken by other G20 countries.