[Economic Terminology] Summary of Meaning, Origin, and Cases of the 'Moratorium' Declaration
President Moon “close to destroying the moratorium”… There are a lot of articles by the Joint Chiefs of Staff titled “North Korea’s Medium-Range Missile Launch”, what does the term “moratorium” mean here?
1. What is a moratorium?
It is derived from the Latin word 'morari', meaning delay. Its meaning is gradually expanded to mean 'delayed payment for external debt at the national level'. Declaring a moratorium will stop paying bonds once, so you can avoid defaulting. However, bond prices plummet and bond interest rates rise. The default state is one step ahead of the moratorium.
If the moratorium is deferred payment, this is 'abandonment of payment', that is, the declaration of bankruptcy of the country, and it is truly a state of national bankruptcy. Since government bonds are a stable investment product that lends money to a very credible group called the state and receives a very low interest in return, the government bonds of most countries are astronomical, different from the amount borrowed by individual individuals or companies. amount. Therefore, even failing to make one or two payments can have a huge impact on the financial system.
2. Abandonment of North Korea's moratorium declaration?
North Korea can be seen as an example of declaring a moratorium in a more extended sense in terms of its own moratorium. North Korea has declared a nuclear missile moratorium, which is a declaration that it will not launch a nuclear missile. The reason North Korea declared a missile moratorium was to favor its negotiating relationship with the United States by declaring that it would no longer develop nuclear weapons and test missiles. It is also speculated that it may have been the next best solution to overcome the current economic poverty that is isolated around the world. The North Korean moratorium declaration was made in April 2018 as the 'Nuclear Test Intercontinental Ballistic Missile (ICBM) Moratorium Declaration'.
However, recently, North Korea has continued to launch missiles. Regarding this, the media is referring to the destruction of the North Korean moratorium declaration. It is said that it is the first time North Korea has launched a medium-range missile since the moratorium declaration. Media reports that North Korea's ICBM launch has come close to destroying the North Korean moratorium.
3. Examples of the moratorium declaration
1. France
France was the first to declare a moratorium . Germany also declared once when the economic crisis struck after World War I.
2. Russia
Russia also declared a moratorium in 1998 due to a decrease in investment due to the Asian economic crisis. At this time, of the $1.47 billion in economic cooperation loans provided by Korea, $1.9 billion (including interest), which had been deferring repayment of each other after repaying $300 million in kind in 1994, was also subject to deferral. South Korea wanted to repay through raw materials such as oil and iron ore, but in September 2003, it was agreed to write off $660 million and pay the remaining $1.58 billion in installments over 23 years including the purchase of weapons worth $500 million. I did. However , since Putin is making a lot of trouble in Ukraine, it is not possible to be relieved until he is fully reimbursed.
3. North Korea
North Korea was also in a moratorium. However , there are also views that North Korea is in a de facto default state of refusing to repay its debts .
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