Opening Address: Murilo Portugal, Deputy Managing Director, IMF

This session will set the scene for the Forum’s discussions. It will provide an overview of the fiscal, debt, and capital market conditions, and how these conditions are impacting sovereign risk and funding. It will discuss the associated contagion and cross-border spill-over effects and the channels through which these effects are transmitted. The session will also examine how policy makers are guiding their economies through the complex process of public sector debt reduction.

This session will discuss the emerging monetary and debt management challenges in the context of heightened sovereign risk and anticipated tightening of monetary policies. It will discuss coordination between monetary authorities and debt managers on unwinding quantitative easing and its potential impact on yields as well as implications for debt and related derivative markets.

This session will discuss the likely impact of financial system regulatory reform on public debt management and markets and how heightened sovereign risk could impinge on financial system regulatory reform. The session will focus particularly on the consequences for sovereign debt issuance strategies, and the functioning of sovereign debt markets and related repo and derivative markets.

This session will discuss medium- and long-term structural changes in the demand for sovereign debt among Advanced Markets (AMs) and between Emerging Markets (EMs) and AMs on account of difference in economic fundamentals. To what extent are EM sovereigns benefitting from improvements in their credit quality? What have been the demand implications for bonds of AM sovereigns who have been downgraded?

This session will discuss the challenges of managing and implementing issuance programs in the context of higher short-term borrowing needs, elevated sovereign risk, including from contagion, and exit policies. It will discuss the differences in funding needs across geographic regions and between EMs and AMs, both in terms of strategies being pursued, and measures being adopted to mitigate funding and execution risks.

This session will discuss the manner in which the financial crisis has been altering debt structures In particular, it will also discuss the scale of contingent liabilities and to what extent the crisis has exacerbated the problems of this category of claims. The session will also discuss the medium-term implications of the new riskier funding landscape as well as the optimal policy and operational responses to these challenges.

Against the backdrop of the previous sessions as well as the ongoing market turbulence, this session will discuss a desirable set of common principles debt managers can use for managing risk in a sovereign debt portfolio in the new environment of heightened sovereign risk and higher direct and contingent debt levels. The session will discuss some principles that debt managers can agree upon and discuss the scope for collective action as a means to mitigating the risks and to reassure debt capital markets.

Moderator: Murilo Portugal, Deputy Managing Director, IMF

Open Discussion