Greece defaults

The Greek government-debt crisis (also known as the Greek Depression) started in late 2009, as the first of foursovereign debt crises in the eurozone – later referred to collectively as the European debt crisis. The common view holds that it was triggered by the turmoil of the Great Recession, but that the root cause for its eruption in Greece was a combination of structural weaknesses in the Greek economy along with a decade-long pre-existence of overly high structural deficits anddebt-to-GDP levels of public accounts. In late 2009, fears of a sovereign debt crisis developed among investors concerning Greece’s ability to meet its debt obligations, due to the revelation that previous data on government debt levels and deficits had been misreported by the Greek government. This led to a crisis of confidence, indicated by a widening of bond yield spreads and the cost of risk insurance on credit default swaps compared to the other Eurozone countries – Germany in particular. In 2012, Greece’s government had the largest sovereign debt default in history. Greece became the firstdeveloped country to fail to make an IMF loan repayment on June 30, 2015. At that time, Greece’s national debt was €323bn.

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