Sovereign debt

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Sovereign debt is debt that is issued by a national government in order to finance the issuing country's growth. It is theoretically considered to be risk-free, as the government can employ different measures to guarantee repayment, e.g. increase taxes or print money.[1]

Just as the U.S. issues Treasuries backed by the full faith and credit of the government, other nations sell bonds in order to raise money to pay for programs ranging from armies to public health care.[2]


References

  1. Sovereign Debt. Financial Times Lexicon.
  2. Is Sovereign Debt the New Subprime?. Yahoo! Finance.