You Never Give Me Your Money? Sovereign Debt Crises, Collective Action Problems, and IMF Lending / Marco Committeri, Francesco Spadafora.

Format:

Book

Government document

Author/Creator:

Committeri, Marco.

Contributor:

Spadafora, Francesco.

International Monetary Fund.

Series:

IMF Working Papers; Working Paper ; No. 2013/020

IMF Working Papers

Language:

English

Subjects (All):

Debt relief.

Financial crises.

Physical Description:

1 online resource (51 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2013.

Language Note:

English

Summary:

We review the impact of the global financial crisis, and its spillovers into the sovereign sector of the euro area, on the international “rules of the game” for dealing with sovereign debt crises. These rules rest on two main pillars. The most important is the IMF’s lending framework (policies, financing facilities, and financial resources), which is designed to support macroeconomic adjustment packages based on the key notion of public debt sustainability. The complementary pillar is represented by such contractual provisions as Collective Action Clauses (CACs) in sovereign bonds, which aim to facilitate coordination among private creditors in order to contain the costs of a debt default or restructuring. We analyze the most significant changes (and their consequences) prompted by the recent crises to the Fund’s lending framework, not only in terms of additional financial resources, new financing facilities (including precautionary ones), and cooperation with euro-area institutions, but also as regards the criteria governing exceptional access to the Fund’s financial resources. We highlight a crucial innovation to these criteria, namely that, for the first time, they now explicitly take account of the risk of international systemic spillovers. Finally, we discuss how the recent crises have provided new political support for a broader dissemination of CACs in euro-area sovereign bonds. Importantly, in the first case involving an advanced economy, CACs were activated in the debt exchange undertaken by Greece in Spring 2012.

Contents:

Cover; Contents; I. Introduction; II. Sovereign Debt Crises and the Collective Action Problem; A. The Collective Action Problem; B. Bonded Debt and Litigation Risk; C. The Role of Official Financing in a Sovereign Debt Crisis; III. The Contractual Approach to Sovereign Debt Restructuring; A. Key Steps towards the Adoption of the Contractual Approach; B. The Dissemination of Collective Action Clauses until the Euro-Area Debt Crisis; IV. The IMF's Lending Framework: the First Phase, from the mid-1990s to 2008; A. Balance of Payments Need, Access Limits, and the Exceptional Circumstances Clause

ChartChart 1 - IMF Lending Arrangements (*), Credit Outstanding, and Undrawn Balances Under GRA; B. The Exceptional Access Policy in Capital Account Crises (2002-2003); C. Earlier Tests of the Exceptional Access Policy; D. Greater Predictability as the Common Thread of Reforms; V. The Impact of the Global Crisis on the International Framework for Dealing with Sovereign Debt Crises; A. Overhaul and Systematization of the Fund's Lending Toolkit; B. The Greek Crisis, Contagion, and Systemic Risk; C. Exceptional Access Policy and International Systemic Spillovers

D. New Impetus for Collective Action ClausesVI. Concluding Remarks; References

Notes:

Description based upon print version of record.

Description based on print version record.

ISBN:

9781616354497

1616354496

9781475533828

1475533829

9781299264595

129926459X

9781475528589

1475528582