Brookings Revisiting Sovereign Bankruptcy
October 2013
Abstract:
Sovereign debt crises occur regularly and often violently. Yet there is no legally and politically recognized procedure for restructuring the debt of bankrupt sovereigns. Procedures of this type have been periodically debated, but so far been rejected, for two main reasons. First, countries have been reluctant to give up power to supranational rules or institutions, and creditors and debtors have felt that there were sufficient instruments for addressing debt crises at hoc. Second, fears that making debt easier to restructure would raise the costs and reduce the amounts of sovereign borrowing in many countries. This was perceived to be against the interests of both the providers of both creditors and major borrowers.
This report argues that both the nature and our understanding of sovereign debt problems have changed, over the course of the last decade, in a direction that creates a much stronger case for an orderly sovereign bankruptcy regime today than ten years ago. Pre-crisis policy mistakes are now recognized to be a much more severe problem for borrowing countries than the costs or limited availability of private financing. 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. Finally, 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.
This report argues that both the nature and our understanding of sovereign debt problems have changed, over the course of the last decade, in a direction that creates a much stronger case for an orderly sovereign bankruptcy regime today than ten years ago. Pre-crisis policy mistakes are now recognized to be a much more severe problem for borrowing countries than the costs or limited availability of private financing. 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. Finally, 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.
Keine Kommentare:
Kommentar veröffentlichen