What Happens When A Country Defaults?
The article provides a basic understanding of sovereign default concepts.
Article Contents
This article will cover following areas:
- Firstly, I will explain what default means
- Then I will outline impacts on a country that defaults
- Finally I will mention the countries that have defaulted in the past
Please read FinTechExplained disclaimer.
Before I begin — it’s worth mentioning that some of the views in this article are based on pure assumptions and can differ from one country to another.
Countries can behave differently during their default. It is a complex topic and is dependent on a large number of factors. Having said that, this article presents potential scenarios that can occur.
What Does It Mean To Default?
Let’s start by understanding what it means for an individual or a company to default.
Let’s assume you want to buy a house and decide to borrow money from a bank. The bank issues you the required loan which needs to be repaid back periodically within 20 years. It is worth noting that the legal agreements, including terms and conditions of the loan will be dependent on your credit…
