We had come to believe that sovereign debt crises were exclusively a phenomenon of developing countries, as all defaulters since World War II had been developing countries.1 Recent developments, however, show that default is an important concern for all countries, threatening the stability of world markets.

This article appeared in the Fourth Quarter 2013 edition of Business Review. Download and read the full issue.

  1. Currently, sovereign debt usually takes the form of bonds issued by a national government. Sovereign default occurs when a government fails to repay its debts.
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