'Soft' is the buzzword of the moment in the workplace (soft skills), diplomacy (soft power) and leadership (the oxymoronic soft dictatorship). In finance it features in the expression soft default, describing the various ways in which governments manage to downplay or dodge repayments to their creditors without actually refusing to pay.
Hard or sovereign default, whereby a nation openly renounces a debt, is very rare, but presiding over currency devaluation and inflation erodes the real value of what creditors receive. Corporate and private debt can similarly be mitigated by servicing existing debts with new ones rather than paying cash, by renegotiating interest rates, switching from hard to soft currency, or insisting on a temporary repayment holiday.
Soft (also known sometimes as implicit or respectable) default, though always based ultimately on money, can also take the form of reneging on a social commitment, as when the state rewrites the rules on pensions, introduces stricter means tests for welfare, etc.
Send your buzzwords, jargon and new and exotic usages to tony.thorne@kcl.ac.uk
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