Bundesbank research says sovereign default can be the best option

bundesbank

Default may be the best option for sovereigns facing financial collapse, according to a discussion paper published by the Deutsche Bundesbank on April 12.

Authors Klaus Adam and Michael Grill suggest in Optimal sovereign default that countries with unsustainable debt-to-GDP ratios face a trade-off between costly default and struggling to pay their bills. According to their analysis, there can be "sizeable" welfare gains from default.

"Optimal default improves the international diversification of

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: