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In 2015 and 2016, the banks in country Quarto borrowed abroad at relatively low interest rates to fund domestic lending. Runaway domestic inflation drove Quarto's

In 2015 and 2016, the banks in country Quarto borrowed abroad at relatively low interest rates to

fund domestic lending. Runaway domestic inflation drove Quarto's domestic interest rates up

enabling the banks to earn high profits. At the same time, Quarto's central bank began intervening

in the foreign exchange market to maintain the value of the country's currency. Comment on the

Quarto banks' funding strategy

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