Government can default without being recognized

Government bonds are usually considered as less risky securities; however, there is still a possibility of government defaults. Greece and other countries like Italy cannot pay back their debts without aids from the IMF and other institutions. While, Britain and America also have high debt levels, but have less pressure. Why? Because they can default without being recognized by the market. When banks collect their loans, they do not want to receive some depreciating assets from their borrowers; however, government bond buyers always receive depreciating assets from the government due to the inflation that is affected by the public policies. Every one knows about it; however, the market focuses more on the risk-avoiding function of the government bonds. There is a downside of it that when people all look for some safe investment choices, the returns of government bonds will drop sharply, investors will look for some longer term government bonds, once the economy is less uncertain and in a good shape, these longer term government bonds will be stuck in the investors' hands and if the amount is huge, there can be insufficient funds available in the market and the profits of the financial institutions will be dragged by these low-return but long-term government bonds.