Thursday, October 03, 2013Tweet
[IWS] Brookings: REVISITING SOVEREIGN BANKRUPTCY [3 October 2013]
IWS Documented News Service
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
Committee on International Economic Policy and Reform (CIEPR)
REVISITING SOVEREIGN BANKRUPTCY [3 October 2013]
[full-text, 57 pages]
This year’s CIEPR report argues that both the nature and our understanding of sovereign debt problems have changed in ways that create a much stronger case for an orderly sovereign bankruptcy
regime today than ten years ago.
• Pre-crisis policy mistakes—and in particular, the tendency of domestic policymakers to overborrow or pay too little attention to private debt accumulation that might turn public—are now recognized to
be a much more severe problem for borrowing countries than the costs or limited availability of private financing. Far from being a problem, proposals that would limit the ability to borrow for countries
with poor policies are a good thing.
• Recent court rulings—particularly a recent U.S. ruling that gives “holdout creditors” that decline a restructuring offer the right to interfere with payments to the creditors that accept such an offer. This will complicate efforts to resolve future debt crises on an ad hoc basis.
• Sovereign debt crises are no longer just a problem in emerging markets, but a core concern in advanced countries as well—particularly in the Euro area. If the Euro is to survive, this will require both better ways to resolve debt crises and stronger, market-based incentives that prevent debt problems from occurring in the first place.
TABLE OF CONTENTS
Preface and Acknowledgments iii
Executive Summary . iv
Chapter 1: Introduction . 1
Chapter 2: Pathologies in Sovereign Debt . . . . 5
Chapter 3: Argentina and the Rebirth of the Holdout Problem 15
Chapter 4: Euro Area Issues 21
Chapter 5: Policy Proposals for the Euro Area and Beyond . 29
References . 47
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