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Sovereign Debt Crises
Sovereign debt crises can be triggered by highdefault probabilities induced by high interestrates. This is more likely if debt is relatively large.In this context, the intervention of a large lenderwith deep pockets, such as the European CentralBank (ECB), can help coordinate on low interestrates. The article is based on the work ofNavarro, Nicolini and Teles (2014).