New Report: How New York State Lawmakers Can Help Address Debt Crises in the Global South

Co-Published by Initiative for Policy Dialogue (IPD) and Institute of Global Politics (IGP)

New York State law has enormous implications for sovereign debt sustainability and debt crises resolutions, a central problem today in countries across the Southern Hemisphere. Because a large share of the international financial sector is based in New York, about 50 percent of global sovereign bonds are issued under New York State law. As there is no international legal framework for resolving situations of unsustainable sovereign debts, New York law is even more consequential. In this report, How New York State Lawmakers Can Help Address Debt Crises in the Global South, co-published by Initiative for Policy Dialogue (IPD) and Institute of Global Politics (IGP), Martin Guzman and Joseph E. Stiglitz explain why reforming New York State law is an urgent priority for resolving debt crises and present three main proposals for reform.

The report describes how New York State’s current legal framework creates misaligned incentives both for creditors and debtors that often render debt restructuring processes inefficient, at the expense of taxpayers. First, the current prejudgment compensatory rate for debts in default issued by New York State is 9 percent, which incentivizes certain groups of bondholders to delay restructuring.

Download Report PDF >>