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Time to Rethink Sovereign Bankruptcy

A New Role for the IMF? - Working Paper #149

David Skeel, Jr., Patrick Bolton

Paper  248kb pdf

This chapter is concerned with the issue of how to balance bailouts (or ‘lending into arrears’) with debt reductions (or ‘private sector involvement’) in the resolution of sovereign debt crises. It begins by briefly outlining the core underlying economic and legal problems sovereigns and creditors face in a sovereign debt crisis. It continues with a review of recent proposals to facilitate or regulate sovereign debt renegotiations, in particular the proposal for a statutory approach to sovereign debt restructuring. We do not aim to assess the political feasibility of the proposed institutions for the resolution of sovereign debt crises. Instead, we focus on their likely effectiveness. In addition to defending a sovereign bankruptcy framework we have developed in recent work, we propose a major reorientation of the IMF’s role in sovereign debt crises.

About the Authors

David A. Skeel, Jr.
Professor Of Corporate Law
University of Pennsylvania

Patrick Bolton
Barbara and David Zalaznick Professor of Business
Columbia University Business School

Publication Information

Type Working Paper
Program Debt Restructuring and Sovereign Bankruptcy
Posted 04/21/08
Download 248kb pdf
# Pages 41