Debt Bomb


DEFINITION of 'Debt Bomb'

This occurs when a major financial institution, such as a multinational bank, defaults on its obligations that causes disruption not only in the financial system of the institution's home country, but also in the global financial system as a whole.


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

  1. Credit Card

    A card issued by a financial company giving the holder an option ...
  2. Consumer Credit

    A debt that someone incurs for the purpose of purchasing a good ...
  3. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  4. Default

    1. The failure to promptly pay interest or principal when due. ...
  5. Default Risk

    The event in which companies or individuals will be unable to ...
  6. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
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