Business, Finance & Economics

Sovereign defaults through history


Greece is hardly alone: nearly every country, including the United States, has defaulted on its debt at some point in history. The past offers stark lessons for the euro zone crisis.


Chris Hondros

Some stories just cry out for quizzes. 

Barry's Neild's piece today in GlobalPost is a good example of that, so here goes:

Where (and when) was the world's first sovereign debt default?

a) Ancient Rome (204 A.D.)

b) Belgium (1946)

c) Greece (377 B.C.)

d) China (1929)

Give up?

Here's a hint: history often has a way of repeating itself. 

Here's another: it is used to cook french fries.

And one more: it rhymes with fleece.

Yes, it's Greece.


Here's how Barry puts it in today's must-read story on the European debt crisis:

While Greece might be on the brink of defaulting on its sovereign loans — causing global markets to plunge and economies to decelerate — there’s nothing particularly Greek about this brand of financial drama.

Admittedly, Greece doesn’t exactly have a clean sheet. It lays claim to the first recorded incidence of sovereign default in 377 B.C. and has failed to repay its debts on numerous occasions in the 2,388 years since.

As Barry points out, Greece is hardly alone in struggling with its debts. Here's a partial list of countries that have suffered similar fates down the years:

  • England (three defaults before 1600)
  • France (eight between 1558 and 1788)
  • China (1929 and 1939)
  • Nigeria (5 times since 1960)
  • Russia (1998)
  • Argentina (2001)

But don't be fooled. Frequency doesn't mean that defaults don't hurt. 

“The first lesson from [the past] is, when you have sovereigns defaulting, you tend to have several defaulting at the same time,” Costa Vayenas, an emerging market analyst at investment bank UBS, told GlobalPost. “History shows us it is never just one country; the issue tends to be broader, more systemic. Many nations are involved — and when things go bad, they go bad for many.”

So who's most at risk if Greece goes the way of England, France, Russia and — well, Greece?

Plenty of countries, and not just in Europe.

To gauge doom and gloom in the not-too-distant future, our friends at Business Insider have put together this fascinating list of countries most likely to default.

Greece, naturally, is at the top of the list.

But so, too, is Ecuador, Venezuela and Pakistan.

Oh, and what country has defaulted more than any other? Check out Barry's story for the answer.