{"id":14295,"date":"2015-11-11T08:10:39","date_gmt":"2015-11-11T13:10:39","guid":{"rendered":"http:\/\/olduvai.ca\/?p=14295"},"modified":"2015-11-11T08:10:39","modified_gmt":"2015-11-11T13:10:39","slug":"a-step-forward-for-sovereign-debt","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=14295","title":{"rendered":"A Step Forward for Sovereign Debt"},"content":{"rendered":"

A Step Forward for Sovereign Debt<\/a><\/h3>\n

Every advanced country has a bankruptcy law, but there is no equivalent framework for sovereign borrowers. That legal vacuum matters, because, as we now see in Greece and Puerto Rico, it can suck the life out of economies.<\/p>\n

In September, the United Nations took a big step toward filling the void, approving a set of\u00a0principles for sovereign-debt restructuring<\/a>. The nine precepts \u2013 namely, a sovereign\u2019s right to initiate a debt restructuring, sovereign immunity, equitable treatment of creditors, (super) majority restructuring, transparency, impartiality, legitimacy, sustainability, and good faith in negotiations \u2013 form the rudiments of an effective international rule of law.<\/p>\n

\n

<\/h2>\n

The overwhelming support for these principles, with 136 UN members voting in favor and only six against (led by the United States), shows the extent of global consensus on the need to resolve debt crises in a timely manner. But the next step \u2013 an international treaty establishing a global bankruptcy regime to which all countries are bound \u2013 may prove more difficult.<\/section>\n

Recent events underscore the enormous risks posed by the lack of a framework for sovereign debt restructuring. Puerto Rico\u2019s debt crisis cannot be resolved. Notably, US courts invalidated the domestic bankruptcy law, ruling that because the island is, in effect, a US colony, its government had no authority to enact its own legislation.<\/p>\n

In the case of\u00a0Argentina<\/a>, another US court allowed a small minority of so-called vulture funds to jeopardize a restructuring process to which 92.4% of the country\u2019s creditors had agreed. Similarly, in\u00a0Greece<\/a>, the absence of an international legal framework was an important reason why its creditors \u2013 the troika of the European Commission, the European Central Bank, and the International Monetary Fund \u2013 could impose policies that inflicted enormous harm.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

A Step Forward for Sovereign Debt Every advanced country has a bankruptcy law, but there is no equivalent framework for sovereign borrowers. That legal vacuum matters, because, as we now see in Greece and Puerto Rico, it can suck the life out of economies. In September, the United Nations took a big step toward filling […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[195,200,460,741,10557,822,826],"class_list":["post-14295","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-default","tag-joseph-stiglitz","tag-sovereign-debt","tag-sovereign-debt-restructuring","tag-un","tag-united-nations"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14295","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14295"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14295\/revisions"}],"predecessor-version":[{"id":14296,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14295\/revisions\/14296"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14295"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14295"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14295"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}