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4 votes
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Why doesn't Russia buy USD to pay its external debt and avoid default?

Because Russia is effectively banned from using dollars. Also, Russia has enough dollars to finance its debt. The reason why Russia might default is that they are not allowed to use their USDs. For ...
1muflon1's user avatar
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2 votes

What is the fundamental problem with Pakistan's economy?

Let's split the problems into two categories, proximate and fundamental. It is easy to confuse the two categories or mix the problems of fundamental nature with those of proximate. Econoimc historians,...
london's user avatar
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2 votes
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Effect of default risk on the interest rate of bonds

To make sense of your question, your $U$ should be $$ U = u(C_1) + \beta (1-p)E_1 [ u(C_2) ] + \beta p E_1[u(Y_2 - T_2)]. $$ (This definition of $U$ assumes that the default event is independent of ...
Michael's user avatar
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2 votes
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Was there a drop in liquidity in the corporate bond market during the Global Financial Crisis?

"...if such a...cycle exists..."---i.e. in economic language, whether liquidity and demand are endogenous to each other. Yes, of course they are. Liquidity (or illiquidity) of any asset can ...
Michael's user avatar
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2 votes
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Swaps and systemic risk

A standard ("vanilla") interest rate swap is a contract in which one party pays a fixed rate of interest, and the other pays a floating rate (typically LiBOR, but it depends upon the market convention ...
Brian Romanchuk's user avatar
1 vote

Why the US wont default on its foreign debt?

It’s an interesting question as to whether US would ever selectively default to foreign holders of US Treasuries. To do so would clearly discourage foreign buyers from ever purchasing Treasuries in ...
dm63's user avatar
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1 vote

Why the US wont default on its foreign debt?

US doesn’t need to ever default if it doesn’t want to. For any country borrowing in its own currency default is purely optional. Because a country that borrows in its own currency can always just ...
1muflon1's user avatar
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1 vote

Can the US government selectively cancel debt held by the Federal Reserve?

The total federal debt equals intragovernmental holdings plus debt held by the public. Technically the federal debt held by the Federal Reserve System (Fed) is considered to be debt held by the public....
SystemTheory's user avatar
1 vote

Was there a drop in liquidity in the corporate bond market during the Global Financial Crisis?

Liquidity is a vague term, and it is more useful to talk about other factors that are measurable. However, the theory that a lack of liquidity alone causes investors to shy away runs against the ...
Brian Romanchuk's user avatar
1 vote

U.S. Treasury defaulting on its bond obligations to China

the administration would threaten to selectively not pay its Treasury Bond obligations to China What exactly would a default trigger? Selective default would be ineffective and it could ...
Iñaki Viggers's user avatar
1 vote

What can explain increasing exports after default episodes?

at periods of default of Argentina, Ukraine and Panama, the data tells exactly the opposite: exports increased in the wake of the sovereign default. What can explain this? Sovereign default may ...
Iñaki Viggers's user avatar
1 vote

Why obligation acceleration triggers Credit-Default Swaps (CDS)?

There is an example of its use at definedterm.com from a Cemex 2006 Note saying "Obligation Acceleration" means one or more Obligations in an aggregate amount of not less that the Default ...
Henry's user avatar
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