Sovereign default

• Sovereign default - Wikipedia, the free encyclopedia

  • A sovereign default is a failure by the government of a sovereign state to pay back its debt in full.

     

    If potential lenders or bond purchasers begin to suspect that a government may fail to pay back its debt, they may demand a high interest rate in compensation for the risk of default. A dramatic rise in the interest rate faced by a government due to fear that it will fail to honor its debt is sometimes called a sovereign debt crisis.