Economic Themes (2008) 46 (1) 6, 67-76
Ivan Marković
Abstract: There is a consensus that sovereign debt restructuring is difficult and costly for both creditors and debtors, and that the international financial architecture should be reformed in ways that reduce these costs. There is less consensus on what such reforms consist of. High restructuring costs are a substitute for explicit legal seniority, and that they could be reduced if legal seniority in sovereign debt markets is allowed to develop through either statutory or contractual means.
Keywords: debt crises; international financial architecture; exclusivity problem
HOW CAN THE COSTS OF DEBT CRISES BE REDUCED?
Ivan Marković
Abstract: There is a consensus that sovereign debt restructuring is difficult and costly for both creditors and debtors, and that the international financial architecture should be reformed in ways that reduce these costs. There is less consensus on what such reforms consist of. High restructuring costs are a substitute for explicit legal seniority, and that they could be reduced if legal seniority in sovereign debt markets is allowed to develop through either statutory or contractual means.
Keywords: debt crises; international financial architecture; exclusivity problem
