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Debt repudiation is almost always horrible for the nation doing it. Argentina tried it. It seems like once you go this route it's always very tempting to do it again. I believe Argentina has had 8 or 9 debt repudiations by now.

In their case they paid off bonds at 76%.

Basically having the world's reserve currency fail via debt repudiation would be worse than 1929, in terms of total collapse.

Most banks, worldwide, hold US Treasuries as their main form o reserves.

SO if T-bills were now with ZERO, then the Yen and Japanese banking system are FUBAR'd. Banks operate on fractional reserve.

For every $1 of reserve that they have they are allowed to lend out some amount of money. In the olden days it was frequently 10%.

So, based on the fact that the Bank of Osaka has $1 billion in T-bills sitting in their vaults they have made $10 billion in loans.

If the T-bills value goes to ZERO then they have no reserves, and their loans are all completely unsecured. This leads to a bank run.

Because Japan has their own central bank they could, theoretically agree to give Japanese banks all the money they need to meet the demands being made against them, but this would result in a huge amounts of new currency swamping the economy, so inflation.