A nation often has an option to default on its sovereign debt rather than undergo painful repayment because:
A) in every debt agreement there is an escape clause.
B) there is no international debt court, nor would creditors gain advantage by military action against debtors.
C) the finance ministers have the option to choose to repay or deliver commodities in lieu of payment.
D) there are limited means by which to transfer international wealth, such as gold or domestic stocks or bonds.

Question

Quizplus · Accepted Answer

There is no international debt court and creditors would not gain advantage by using military action against sovereign debtors. This means that sovereign nations have the option to default on their debt without facing significant consequences from creditors.

A Nation Often Has an Option to Default on Its