The fact is that when the crisis hit these governments had no trouble getting cash.
It is always good to work with first principles as they will rarely lead you astray. They cut out all the humbug in the media, the statements by politicians and the ideological ravings of vested interests.
Sweden – sovereign issuer, freely convertible currency, some foreign currency debt.
”So those sovereign-issuing nations(among them Sweden) with no or negligible debt denominated in foreign currency have no default risk on their public debt associated with factors such as size of deficit, outstanding debt stocks etc. Their government’s can always meet their liabilities and would only default as an insane act of politics.
There are no financial risks associated with their debt.
I haven’t done a complete analysis of the proportions of debt that are denominated in foreign currency for the other currency-issuing nations. My feeling is (from old data) that the proportion varies but is small.
At any rate, these nations can always meet their domestic obligations (including servicing debt denominated in their own currency which is held by foreigners) but in some weird situation might find it hard to service their foreign-denominated debt. Highly unlikely but there is a smidgen of risk.”
For the non-sovereign in currency nations – all of which are ‘happily’ ensconced in the failed Eurozone, they all face public debt default risk. The risk varies but they all are exposed to it.
– Bill Mitchell
