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A practice of reducing the intrinsic value of a currency, especially one dependent upon a precious metal, by supplementing metal of inferior value, is termed as debasement. It is used to reduce the intrinsic value of coins by lowering the quantity of copper, gold, nickel or silver in the coin.

Besides reducing the amount of precious metals, debasement can be done by fractional reserve lending, eliminating the commodity backing, re-denominating a currency and deficit spending.

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Default Risk Premium

What is Default risk premium? Default risk premium refers to the additional return received by the lender from the borrower by assuming default risk. Default r......
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