The article explores how easier international trading of assets affects governments' ability to borrow money. When transaction costs decrease, governments may be more likely to default on debt held by foreigners, leading to higher borrowing costs and lower welfare. Even without transaction costs, governments may still prefer domestic debt holders due to the risk of default being linked to tax burdens. Asset inequality can reduce this preference, potentially increasing default risk. If foreign creditors are less risk averse, there can be different scenarios with low or high default risk based on who holds the debt.