Debt and Global Finance

How CACs Became Boilerplate, or the Politcs of Contract Change

The authors found this intriguing, as it is doubtful that senior political figures in the major economic powers knew what legal boilerplate was, let alone would advocate for particular clauses. There was policy content in the advocacy, however, over whether ‘market-based’ (i.e. contractual) changes would suffice to provide for orderly restructuring of sovereign bonds of developing countries in financial crisis. In fact, the CACs in question have yet to face a major test under fire. The authors found little indication of belief among the more than 100 intimately involved people in the CAC debate that they interviewed that the clauses would be important determinants of restructuring outcomes.

By Manuel Nunez, ago

Dealing Deftly with Sovereign Debt Difficulties

This paper looks at the international process for overcoming sovereign debt crises in developing and transition economies. It first characterizes the nature of sovereign debt crises, and how their resolution has fallen under the domain of global policy. It then highlights the complexity of determining how much debt a post-crisis country should end up with and how the major players interact in determining the actual workout in typical cases. It concludes by considering certain proposals for improving the chances that debt workouts will be effective, speedy and fair.

By Manuel Nunez, ago
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