Glossary

In finance, a default occurs when a borrower fails to repay a debt, such as a loan or a bond, according to the terms agreed upon with the lender.

This can include missing a payment, making a partial payment, or violating other terms of the debt agreement. Defaults can have severe consequences for borrowers, such as damage to their credit rating, legal actions, and potential loss of collateral. 💸

For example, if a person takes out a mortgage to buy a house but stops making monthly payments, they would be considered in default on their mortgage.

Fun fact: Argentina holds the record for the most sovereign debt defaults in modern history, having defaulted nine times, with the most recent one occurring in 2020. 🇦🇷💰