What Happens If A Country Goes Bankrupt, short answer is it can’t , as "bankrupt" is a legal status within or between states only applied to an individual or corporation , as part of the definition for a sovereign country or nation t…
What Happens If A Country Goes Bankrupt, short answer is it can’t , as "bankrupt" is a legal status within or between states only applied to an individual or corporation , as part of the definition for a sovereign country or nation that makes it NOT a company or person , a Sovereign State recognizes its own currency as means of payment & you can't
Governments take a lot of loans from other countries & or banks
& then service that debt based on tax revenue. If tax revenues fall ,
if the country cannot produce enough to cover their own expenses
not paying principal or interest on government bonds when due &
When a country fails to pay its creditors on time or just won’t service its national sovereign debt, defaulting on their sovereign obligation, it is said to go into
A sovereign default, when a government suspends debt repayments
1500's Spain defaulted 4 times as inflation cut into the value of New World gold & silver
1876 Egypt, Urabi revolt / British invasion & the recent screw ups in Greece, & Argentina
is it is far harder for creditors to repossess assets of a sovereign entity
than to repossess the assets of a company or person
countrys & creditor alliances have threatened war or invaded as a result of defaults
A country’s history of fiscal responsibility, including past defaults, and current compliance with debt repayment plans, are major contributors in preventing any action against the country
deflate the currency, & the cost price level of goods and services to make the cash worth less than what was borrowed allowing the state to repay its loans
cause inflation to the cost price level of goods and services reduce the value of repayments. This often happens after wars.
1944 New Hampshire Bretton Woods conference Agreement forced their central banks to maintain fixed exchange rates between their currencies & the IMF agreement to act as a lender of last resort that cannot over-ride Sovereignty while helping restructur..
