Economy
Sovereign Debt
Definition
The total amount of money a national government has borrowed, including domestic and foreign-denominated bonds.
Explanation
Sovereign debt is issued through government bonds (e.g., US Treasuries, Japanese Government Bonds). It can be denominated in domestic currency (lower risk, can be inflated away) or foreign currency (higher risk, can lead to debt crises). The global sovereign debt market exceeds $70 trillion. A sovereign debt crisis occurs when a government cannot service its obligations.