The power of taxation and the usually ample State property nourish the far-spread concept of the State as a reliable debtor. However, from a historical perspective, State insolvency is by no means a rare phenomenon. It is usually triggered by an unsustainable burden of foreign debt. Whilst countries can meet outstanding debts in their own currency by speeding up the money press (fostering inflation), this mechanism is no answer to debts in foreign currencies. The last two centuries witnessed about 90 cases of State insolvency, moratorium, and default on foreign...
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