Crisis Resolution: Next Steps

Kenneth Kletzer, Barry Eichengreen and Ashoka Mody

No 2003/196, IMF Working Papers from International Monetary Fund

Abstract: At the April 2003 meeting of the International Monetary and Financial Committees, it was decided to further encourage the contractual approach to smoothing the process of sovereign debt restructuring by encouraging the more widespread use of collective action clauses (CACs) in international bonds. This decision was shaped partly by Mexico's successful launch of a bond subject to New York law but featuring CACs, and by subsequent issues with similar provisions from other emerging market countries. This paper reviews the developments leading up to that event, its implications, and prospects for the future. It asks whether we can expect to see additional issuance by emerging markets of bonds featuring CACs, whether such a trend would in fact help to make the world a safer financial place, and what additional steps might be taken to further enhance modalities for crisis resolution.

Keywords: WP; action clause; debt restructuring; single bond; bond market; debt repayment; debtor country; expected return; GNP ratio; short-term debt; Collective Action; Aggregation; Transition; borrowing cost; Collective action clauses; Bonds; Moral hazard; Emerging and frontier financial markets; Credit ratings; Africa; Global (search for similar items in EconPapers)
Pages: 58
Date: 2003-10-01
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Citations: View citations in EconPapers (41)

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Working Paper: Crisis Resolution: Next Steps (2003)
Working Paper: Crisis Resolution: Next Steps (2003)
Working Paper: Crisis Resolution: Next Steps (2003)
Working Paper: Crisis resolution: next steps (2003)
Working Paper: Crisis Resolution: Next Steps (2003)
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