DISCUSSION.

Alan Shapiro's paper entitled "Currency Risk and Country Risk in International Banking" is a timely one in a subject area whose popularity is growing. These comments are written in suggestion form, and their purpose is to suggest areas in which the paper might be strengthened. The comments will be directed in three areas of the paper. 1. The nature of the equilibrium referred to in the section on currency risk and firm borrowing. 2. The direction of causation between exchange rates and prices. 3. Foreign currency risk and country risk in country borrowing. [ABSTRACT FROM AUTHOR]