Explained: What is a default?

These bonds are under the assumption they will get their money back with higher interest rates. Repayments are scheduled to be made in a timely manner. This sovereign debt is usually owned in foreign currencies, which means a struggling government cannot simply print more money of its national currency to have fast access to liquidity and appease its creditors. When an economic crisis becomes particularly challenging, an indebted country might find itself unable to repay some or even all of its accumulated debts. If the government fails to honour a payment, the country officially enters into default. Watch the video explainer to learn more about what default means. #EuropeDecoded
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