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A new dimension to currency mismatches has been created by policies that have increased global liquidity. Lower policy rates and a huge expansion in central bank balance sheets-purchases of domestic bonds in the advanced economies and of foreign assets in the emerging market economies (EMEs)-have served to ease financing conditions facing EME companies. This has allowed these companies to increase their gearing, notably by greater foreign currency borrowing. Aggregate foreign currency mismatches of the non-government sector in the EMEs have therefore risen sharply since 2010. Microeconomic data show that it was not only companies providing tradable goods and services but also those producing non-tradable goods which have increased their foreign currency borrowing. The across-the-board decline in EME companies' profitability since mid-2014 has brought to light significant vulnerabilities that may aggravate market volatility. Weak corporate profitability is also likely to constrain business fixed investment, and therefore growth, in the near term. But the strong external asset positions of most emerging market economies will help the authorities cope with these challenges.