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The curious case of the missing defaults

Logic would suggest this cycle should have seen more sovereign defaults in emerging markets, but there are reasons why it has not happened

While Venezuelas government-run oil company continues to service its external bonds, debts owed to China are understood to be in arrears
While Venezuelas government-run oil company continues to service its external bonds, debts owed to China are understood to be in arrears Photo: Getty Images

Booms and busts in international capital flows and commodity prices, as well as the vagaries of international interest rates, have long been associated with economic crises, especially — but not exclusively — in emerging markets. The “type” of crisis varies by time and place. Sometimes the “sudden stop” in capital inflows sparks a currency crash, sometimes a banking crisis, and quite often a sovereign default.

Twin and triple crises are not uncommon.

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