IMF Working Papers

Crisis Resolution: Next Steps

By Kenneth Kletzer, Barry J. Eichengreen, Ashoka Mody

October 1, 2003

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Kenneth Kletzer, Barry J. Eichengreen, and Ashoka Mody. Crisis Resolution: Next Steps, (USA: International Monetary Fund, 2003) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Bonds, Collective action clauses, Credit ratings, Emerging and frontier financial markets, Financial institutions, Financial markets, Financial sector policy and analysis, Money, Moral hazard

Keywords: Action clause, Africa, Aggregation, Bond market, Bonds, Borrowing cost, Collective Action, Collective action clauses, Credit ratings, Debt repayment, Debt restructuring, Debtor country, Emerging and frontier financial markets, Expected return, Global, GNP ratio, Moral hazard, Short-term debt, Single bond, Transition, WP

Publication Details

  • Pages:

    58

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2003/196

  • Stock No:

    WPIEA1962003

  • ISBN:

    9781451859980

  • ISSN:

    1018-5941

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