Debt Bomb

What does it mean?
This occurs when a major financial institution, such as a multinational bank, defaults on its obligations. This can cause disruption and chaos not only in the financial system of the institution’s home country, but also in the global financial system as a whole.

In Other Words...
A debt bomb could also occur if consumer spending were heavily based on debt. For example, if a nation incurred huge credit card debt, individual debt holders could default en masse and create trouble for creditors.

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Related Terms
Consumer Credit | Credit Card | Debt

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