--- description: This is what happened when Argentina and Iceland defaulted on their loans. title: What Happens to a Country That Defaults on Its Loans? image: https://static.time.com/v3/assets/bltea6093859af6183b/bltea7d5badd706a68e/69885a2135ba6f6a8bc0e18f/gettyimages-465907997.jpg?branch=production&width=3840&quality=75&auto=webp&crop=16:9 ---  * [World](/section/world/) ## World Update your preferences in [Account Settings](/account/preferences/) Close * [Economy](/tag/economy/) ## Economy Update your preferences in [Account Settings](/account/preferences/) Close # What Happens to a Country That Defaults on Its Loans? by [Salima Koroma](/author/salima-koroma/) ## Salima Koroma Update your preferences in [Account Settings](/account/preferences/) Close Jul 9, 2015 1:40 PM CUT  GLASGOW, SCOTLAND - JANUARY 30: In this photo illustration, Scottish bank notes are placed on a table on January 30, 2014 in Glasgow, Scotland. The Governor of the Bank of England Mark Carney, said yesterday during a speech in Edinburgh, that an independent Scotland would need to give up some power to make a currency union with the rest of the UK work. (Photo Illustration by Jeff J Mitchell/Getty Images) GLASGOW, SCOTLAND - JANUARY 30: In this photo illustration, Scottish bank notes are placed on a table on January 30, 2014 in Glasgow, Scotland. The Governor of the Bank of England Mark Carney, said yesterday during a speech in Edinburgh, that an independent Scotland would need to give up some power to make a currency union with the rest of the UK work. (Photo Illustration by Jeff J Mitchell/Getty Images)Jeff J Mitchell—Getty Images by [Salima Koroma](/author/salima-koroma/) ## Salima Koroma Update your preferences in [Account Settings](/account/preferences/) Close Jul 9, 2015 1:40 PM CUT In 1945, Britain borrowed $4.3 billion from the U.S. That money prevented Britain from going bankrupt after World War II. In 2006, Britain finally paid off the last of that loan. But when a country can’t pay off its debts, what happens? TIME explains in the above video. ```json [{"@context":"https://schema.org","@type":"NewsArticle","@id":"https://time.com/3950228/country-defaults-loans/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/3950228/country-defaults-loans/"},"headline":"What Happens to a Country That Defaults on Its Loans?","datePublished":"2015-07-09T13:40:25.000Z","dateModified":"2026-02-22T09:04:33.121Z","description":"Argentina and Iceland provide examples","url":"https://time.com/3950228/country-defaults-loans/","keywords":["Economy","World","Greece","Argentina","imf","Iceland"],"thumbnailUrl":"https://static.time.com/v3/assets/bltea6093859af6183b/bltea7d5badd706a68e/69885a2135ba6f6a8bc0e18f/gettyimages-465907997.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","author":[{"@type":"Person","name":"Salima Koroma","jobTitle":null,"url":"https://time.com/author/salima-koroma/"}],"articleSection":"World","image":[{"@type":"ImageObject","url":"https://static.time.com/v3/assets/bltea6093859af6183b/bltea7d5badd706a68e/69885a2135ba6f6a8bc0e18f/gettyimages-465907997.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","width":1200,"height":675,"headline":"Mark Carney Raises Doubts Over Alex Salmond's Plan To Share The Pound","caption":"Mark Carney Raises Doubts Over Alex Salmond's Plan To Share The Pound","creditText":"Jeff J Mitchell—Getty Images","representativeOfPage":true}],"publisher":{"@type":"Organization","name":"Time","url":"https://time.com/","logo":{"@type":"ImageObject","url":"https://time.com/images/logo.png","width":528,"height":156},"foundingDate":"March 3, 1923","sameAs":["https://www.facebook.com/time","https://www.instagram.com/time/?hl=en","https://twitter.com/time","https://www.pinterest.com/timemagazine"]}},{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"item":{"@id":"/section/world/","name":"World"}},{"@type":"ListItem","position":2,"item":{"@id":"/tag/economy/","name":"Economy"}},{"@type":"ListItem","position":3,"item":{"@id":"https://time.com/3950228/country-defaults-loans/","name":"What Happens to a Country That Defaults on Its Loans?"}}]}] ```