Suchergebnisse

During the past couple of years, policy-makers in Washington and other capitals of G-7 countries have been flogging the idea that the functioning of the world's financial markets must be improved by making it easier for insolvent governments, especially in emerging markets, to obtain debt relief from their bondholders and bankers.Most savvy investors, financial intermediaries, and emerging-market government officials, however, are at a loss to understand why the G-7 and the International Monetary Fund (IMF) believe the international financial system would function better if there were specific mechanisms to facilitate sovereign bankruptcies.

Examines how private creditors have responded to sovereign insolvency. At issue is the idea of expediting state debt restructuring. Examples of debt restructuring include the cases of Uruguay, Bolivia, Nicaragua, & Ecuador. It is suggested that, despite opinion to the contrary, private creditors provide a model that might well serve official bilateral & multilateral lenders. Attention turns to the G-7 & IMF rationale in devoting so much energy to facilitating future sovereign debt workouts to private creditors. In this light, the Sovereign Debt Restructuring Mechanism (SDRM) is discussed. It is noted that the SDRM does not come with a proposal to address the deleterious multibillion dollar G-7 & IMF bailout packages offered to strategically important states since 1995. A contractual rather than statutory approach involving the introduction of new collective action clauses (CACs) into bond contracts to ease the debt restructuring process is described, suggesting that, while, harmless, inclusion of CACs will make little visible difference to the functioning of international finance. It is contended that the better solution would be a scaling back of the G-7's massive bailouts & a return to objectivity in the IMF's doling out of seed money. Further, the notion of quick & painless debt restructuring is seen to be ethically & practically problematic. It is maintained that the positive work done by US & European bondholders & commercial & investment banks ought to be acknowledged when official development entities have had far less success. J. Zendejas