Eli5 what happens when a country goes bankrupt?


Eli5 what happens when a country goes bankrupt?

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A country with it’s own currency can’t really go bankrupt. It just prints enough currency to pay its creditors.

When governments owe money in a different currency and can’t pay, the people who lent them money are usually and unfortunately out of luck. Seizing national assets is very difficult and would cost the nation even more money, and often times requires military action, which tends to be more expensive than the debt is worth also.

The only other thing that creditors can do is try to seize a governments overseas assets. This does happen sometimes, but depends on a very complex tangle of contracts and international treaties and agreements.

A country doesn’t really go bankrupt in the same sense that an individual would, they can’t really have their assets seized.

When a country defaults on its international debt it becomes harder for them to borrow in the future, if they are lucky enough for someone to loan them money it will be at a much much higher cost