ABSTRACT
The first major international debt crisis occurred during the 1980s when a number of developing countries were close to defaulting on the loans they owed to Western banks. These banks were so overextended at the time that there was a real danger that a major default would spark a crisis of confidence. If a sufficient number of worried depositors had tried to grab their money and run for cover, any one of a number of banks might have been forced to close, triggering a chain reaction of other bank collapses that would have led to a full-blown international financial crisis and quite possibly a 1930s-like worldwide depression.
