Sovereign Liquidity Crises: The Strategic Case for a Payments Standstill

Marcus Miller and Lei Zhang ()

Economic Journal, 2000, vol. 110, issue 460, 335-62

Abstract: Is sovereign borrowing so different from corporate debt that there is no need for bankruptcy-style procedures to protect debtors? With the waiver of immunity, sovereign debtors who already face severe disruption from short-term creditors grabbing their currency reserves are also exposed to litigious creditors trying to seize what assets they can in a "race of the vultures". The lack of an orderly procedure for resolving sovereign liquidity crises means that the IMF is de facto forced to bail out countries in trouble. The strategic case for legalising standstills is to rescue the international financial system from this "time consistency" trap.

Date: 2000
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Related works:
Working Paper: Sovereign Liquidity Crisis: The Strategic Case for A Payments Standstill (1999)
Working Paper: Sovereign Liquidity Crisis: The Strategic Case for a Payments Standstill (1999)
Working Paper: Sovereign Liquidity Crises: the Strategic Case for a Payments Standstill (1998)
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