Mr. Van Dyk said local officials would have to make clear to bondholders their willingness to default if cost overruns or low ticket sales diminished returns from sports events.
That means any Greek default would cost the ECB billions of euros in losses and potentially impact the value of the euro, disrupting European and international financial markets, and the conduct of European monetary policy.
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Also, according to the WSJ, there was "a related trade...allowing the bank to capture the premium between the cost of default protection ending in 2014 and the cost of protection ending in 2017".
In recent weeks there has been a rise in both LIBOR (a gauge of banks' borrowing costs) and the credit-default-swap spreads on bank bonds (the cost of insuring against default risk).
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But amid the talk of the long-term cost of default, it's worth noting that countries can pay a penalty for NOT defaulting as well, not just in terms of slower growth but also higher interest rates.
And Ecuador's neighbours, like all other emerging markets, are worried that the default will put up their cost of borrowing.
The higher the cost of a credit default swap, the higher the implied risk.
Scandinavian countries are safe when measured by the cost to insure against default through credit default swaps.
The destruction wrought from default is much worse than the cost of battling hypothetical, follow-on lawsuits that Argentina argues could follow a court victory by the holdouts.
The cost to protect against a default by RadioShack reached its highest level ever on Wednesday.
Meanwhile the cost of insuring against a default by Bank of America has shot up.
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The cost of buying insurance against default by GM increased by 10% in the credit-default swaps market.
The, The cost incurred to buy Credit Default Swap protection on corporate bonds from climbed to the highest level this month.
The Economist has compiled a credit-crunch index, comprising a number of measures on everything from bank lending to the cost of buying insurance against default for banks, firms and sovereigns in the euro zone.
There were some signs of jitters in financial markets on Wednesday, with the cost of protecting against a French default edging higher.
Either the economy will continue to be poor and the young business will likely default of the economy will improve and the cost of funds will rise.
At the same time, the cost of insuring against a Portuguese sovereign default has hit another record high.
The gap between Spanish and German long-term borrowing rates also reached a record high, as did the cost of insuring against a Spanish sovereign default.
The German fear was that, without it, every euro member would have an incentive to run a big deficit, since the cost in higher interest rates and greater default risk would be shared collectively.
In Europe, the Stoxx Europe 600 fell 1%, as the cost of insuring Portugal's debt against default climbed to a record.
No, argues David Moss, an economist at Harvard Business School, in a forthcoming book: the benefits of putting a ceiling on the potential losses faced by shareholders far outweighed the cost of a slightly higher risk of debt default.
In the nightmare scenario the markets do not find the eurozone restructuring plans credible and so push up the cost of borrowing to southern European governments to the point where default is inevitable.
But, typically, many investors tend default to focusing most on volatility and less (or not at all) on opportunity cost.
Coming when investors already are concerned about the strength and duration of the economic recovery, and the cost of the fiscal policies that led back to growth, Dubai World's default risk may be only one of the risks that market actors were underpricing.
In fact, this default is a default and not a success and to the extent it has been modified (lower interest or principal) it cost me and you the taxpayer, money.
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