Dollar-denominated debt in emerging markets has risen past $4 trillion for the first time following a surge in issuance during the COVID-19 crisis, data from the Bank for International Settlements (BIS) has shown. The central bank umbrella group said a 14% jump in debt issuance during the April to June second quarter had driven a 7% year-on-year increase in broader dollar-denominated credit. Dollar borrowing costs have fallen since the Federal Reserve slashed its interest rates to almost zero this year, but emerging markets are often warned of the “original sin” of being unable to repay dollar debt when their currencies fall. Consistent with the past few quarters, credit to Africa and the Middle East registered the highest growth rate at 14%, the BIS said, driven by countries in the Middle East. Emerging Asia-Pacific and Latin America saw 9% and 5% respective year-on-year increases. In contrast, emerging Europe saw a 5% fall, extending the decline seen over the past six years as euro-denominated credit has become more important for the region. Outstanding euro-denominated credit in emerging Europe, which includes countries such as Poland, Czech Republic, Hungary and Romania, surpassed dollar credit in terms of the overall amount earlier this year.