Economists treat the inability of emerging economies to borrow abroad in their own currency as a property of countries. It may be a property of the architecture.
Original sin is the name economists gave to a persistent fact: most emerging economies cannot borrow abroad in their own currency. Foreign capital will hold their obligations only if the obligation is denominated in a currency the foreigner can measure, usually the dollar, which moves the currency mismatch onto the borrower, the balance sheet least able to carry it. The first recycling of the 1970s was built that way. OPEC surpluses were deposited in London and New York and lent onward to Mexico, Brazil and Argentina as floating-rate dollar loans; when Volcker raised the price of the dollar, the mismatch detonated, and the weekend in August 1982 when Mexico’s finance minister arrived in Washington to say the money was gone cost Latin America a decade.
The literature has treated the constraint as a property of countries, a function of credibility, institutions and history. Tranchco’s papers make a narrower claim: the dominant architecture for external sovereign borrowing made emerging-market collateral internationally legible by changing the currency of the obligation, and that choice, not the collateral, is what put the mismatch where it could do most damage. Change the architecture and the question reopens.
The alternative keeps four things at home. The bill stays in its own market, on its own rails, under its own law. The currency stays the one in which the sovereign owes. The central bank keeps control of convertibility. And the domestic institution that understands the currency keeps the share of its risk it elects to hold, and is paid for holding it. What crosses the border is a claim: senior, denominated in dollars, secured on the local bill, carrying its agreed share of the currency risk and no more. The sovereign has issued no dollar obligation, and yet dollar capital funds its bill. The risks did not have to travel together; the old architecture globalised the balance sheet, this one globalises the claim.
Whether such a claim can become usable collateral in the international system is a separate question, and it is somebody else’s to answer: eligibility is conferred by whoever takes the collateral. Three of the six conditions can be engineered, two must be earned through trading, and the sixth, convertibility, remains the sovereign’s. The pilot in Pakistan asks the practical form of the question: can a country keep borrowing in its own currency and make the resulting collateral useful to dollar capital anyway? If it can, original sin looks less like a law of international finance than an engineering problem nobody had yet solved.
The full argument is in In God We Trust. All Others Post Collateral., October 2026, which is public.