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Conference on “Frameworks for Sovereign Debt Restructuring”

Recent events--especially the difficulties faced by Argentina--have reminded us of the risks of not having orderly Frameworks for Sovereign Debt Restructuring. Its absence has led to the emergence of destabilizing speculative behavior in international debt markets and has delayed the resolution of sovereign debt crises. Delays in debt restructurings have been costly for sovereigns and for good-faith investors.
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The potential adverse effects for global economic, political, and social stability that the lack of these frameworks implies make their design and implementation a matter of urgencya claim that has been recently endorsed by a resolution of the United Nations.

The International Monetary Fund recognized the need for implementing these frameworks in 2001.

Over the past fifteen years discussions have explored many alternatives, and their economic, political, and social consequences. Each has to be evaluated in terms of ex ante incentives is there, in some sense too much or too little lending? How is lending distributed across countries? Is lending done on the right terms? Do the lenders have the right incentives for due diligence? And do the borrowers for prudent lending? as well as ex post incentives: when a problem occurs, are there incentives for a timely resolution, without undue delay? Are there incentives for a fair and efficient resolution, one that enables the indebted country to return to growth quickly, which does not impose undue hardship on its citizens, and provides fair compensation to the creditors?

Some have suggested that simple modifications of the current contractual approach are all that is required. Others claim that some sovereign debt restructuring mechanism would be desirable.

This conference brought together academics and other experts, to discuss these issues and provide guidance on (a) what kinds of contractual reforms would facilitate a better working of sovereign debt markets? (b) What are the limits of the private contractual approach? What are the benefits and limits of a statutory approach? Do contractual approaches help address the problems posed by these limitations? How might these be structured in order to promote a more efficient and equitable market for international debt? Are there intermediate approaches, involving soft law, that might facilitate the functioning of sovereign debt markets?

More generally, the conference sought insights on how the market-based approach can be complemented by a legal framework that replicates the functions of a national bankruptcy court.

  • Patrick Bolton
    Commentator
    Barbara and David Zalaznick Professor of Business
    Columbia University Business School
  • Lee Buchheit
    Commentator
    Honorary Professor
    University of Edinburgh Law School
    University Of Edinburgh
  • Martin Guzman
    Commentator
    Co-President
    Initiative for Policy Dialogue (IPD)
  • Sean Hagan
    Commentator
    Professor from Practice
    Georgetown Law School
    Georgetown University
  • Jim Haley
    Commentator
    Senior Fellow
    CIGI
  • Barry Herman
    Commentator
    Visiting Senior Fellow, Graduate Program
    International Affairs
    The New School
  • Jurgen Kaiser
    Commentator
    Policy Coordinator
    erlassjahr.de
  • Domenico Lombardi
    Commentator
    Director
    Global Economy Program
    CIGI
  • José Antonio Ocampo
    Commentator
    Professor of Professional Practice at Columbia University and former Minister of Finance of Colombia
    Columbia University
  • Kunibert Raffer
    Commentator
    Associate Professor
    Department of Economics
    University of Vienna
  • Benu Schneider
    Commentator
    Research Fellow
    Overseas Development Institute
  • Shari Spiegel
    Commentator
    Senior Economic Affairs Officer
    UN DESA
  • Joseph Stiglitz
    Commentator
    President
    Initiative for Policy Dialogue (IPD)
  • Jan Svejnar
    Commentator
    James T. Shotwell Professor of Global Political Economy; Director, Center on Global Economic Governance
    School of International and Public Affairs, Columbia University
  • Marilou Uy
    Commentator
    Senior Fellow
    Global Economic Governance Initiative
    Boston University
  • Sergio Chodos
    Commentator
    Executive Director for Argentina and Bernardo Lischinsky, Senior Advisor to Executive Director
    IMF
  • Hugh Bredenkamp
    Commentator
    IMF
  • Richard Conn
    Commentator
    Managing Partner
    Innovative Partners LLC
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