As these measures address some of the root causes of the high stock of NPLs, they are expected to have positive effects on NPL prices, further reducing the price gap between banks and potential buyers and helping the development of a secondary market for these loans. However, this market is still extremely thin and opaque; prices may not be fairly determined.
These constraints clearly matter. But it is rarely noted that when countries did have the freedom to devalue, changes in exchange rates were frequently disruptive of trade with their neighbors – and further that some countries that did have that freedom mismanaged it, and paid a significant price in terms of economic performance.