Revisiting Sovereign Bankruptcy
Sovereign debt crises occur regularly and often violently. The recent debt crisis in Greece nearly led to the collapse of the euro. However, there is no legally and politically recognized procedure for restructuring the debt of bankrupt sovereigns.
On October 3, Global Economy and Development at Brookings hosted a discussion to launch a new report on sovereign bankruptcy by the Committee on International Economic Policy and Reform — a group of independent economic experts that includes academics as well as former government and central bank officials. The report examines pre-crisis policy mistakes and recent court rulings, and argues that there is a much stronger case for an orderly sovereign bankruptcy regime today than ever before. The report also presents solutions to this problem at the euro-area and global levels.
The panel included several members from the Committee on International Economic Policy and Reform, as well as other leading experts.
Managing Director and Chief Economist - Institute of International Finance
Professor of Law - Georgetown University Law Center
Director, Strategy, Policy, and Review - International Monetary Fund
University of Mainz
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[As the Fed and other major central banks begin raising rates, some emerging market central banks would be forced to follow suit. Otherwise, capital would flee and their currencies would plunge in value, further aggravating inflation.] You could have a crisis if investors all decide to run for the exits at the same time.