<p>If you borrow money from person <em>A</em> and lend it to person <em>B</em>, how does person <em>B</em>'s default prevent you from paying back what you owe to person <em>A</em>? </p>

<p>That hypothetical situation is essentially the same between banks and governments among various countries, except that the number of entities is much greater than three (you, person A, and person B), thereby exacerbating the chances of contagion, panic, and a <a href="https://en.wikipedia.org/wiki/Domino_effect" rel="nofollow noreferrer"><em>domino effect</em></a>.</p>

CC BY-SA 4.0
2019-01-20T20:39:44.483Z
2019-01-20T20:39:44.483Z
Iñaki Viggers
<p>If the Greek government defaults on its bonds issued by French and German investment banks, how does that prevent the French and German governments from paying back the money that they owe to investment banks in other Euro countries?</p>

CC BY-SA 4.0
2019-01-20T20:40:11.133Z
In principle and in law, it doesn't. So how did this question occur to you?
Alecos Papadopoulos
CC BY-SA 4.0
2019-01-21T15:44:12.937Z
From this video at 9:35: https://www.youtube.com/watch?v=j4_tyEl84IQ
Donald Alesson
<macroeconomics><government-debt><international-economics><bonds><euro-area>
Greek Debt Crisis
Donald Alesson
# Greek Debt Crisis

(Asked by: username_0 on 2019-01-20)

If the Greek government defaults on its bonds issued by French and German investment banks, how does that prevent the French and German governments from paying back the money that they owe to investment banks in other Euro countries?

**Tags:** macroeconomics, government-debt, international-economics, bonds, euro-area

> **Comments:**
> **username_1**: In principle and in law, it doesn't. So how did this question occur to you?  
> **username_0**: From this video at 9:35: https://www.youtube.com/watch?v=j4_tyEl84IQ  

---

## 1 answers

### Answer by username_2 on 2019-01-20. Score: 1

If you borrow money from person *A* and lend it to person *B*, how does person *B*'s default prevent you from paying back what you owe to person *A*?

That hypothetical situation is essentially the same between banks and governments among various countries, except that the number of entities is much greater than three (you, person A, and person B), thereby exacerbating the chances of contagion, panic, and a [*domino effect*](https://en.wikipedia.org/wiki/Domino_effect).


---

