Author:
Publisher:
ISBN:
Category : Debts, External
Languages : en
Pages : 146

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Author: Ms.Enrica Detragiache
Publisher: International Monetary Fund
ISBN: 1451845642
Category : Business & Economics
Languages : en
Pages : 32

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This paper studies under what circumstances creditworthy sovereign borrowers may be denied liquidity by rational creditors. It is shown that, when the creditor side of the market consists of many small investors there may be multiple rational expectations equilibria. In one equilibrium, creditors’ pessimistic expectations about the borrower’s creditworthiness become self-fulfilling, and the borrower experiences a liquidity crisis. Multiple equilibria can be avoided by marketing the loan appropriately or by developing a reputation for following good policies. Liquidity problems can also arise because of the temporary disruption of international bond markets due to events unrelated to the borrower’s circumstances. Policies responses are discussed.

Author: Mr.Giovanni Dell'Ariccia
Publisher: International Monetary Fund
ISBN: 1484359623
Category : Business & Economics
Languages : en
Pages : 54

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This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.

Author: Michael Chui
Publisher:
ISBN:
Category :
Languages : en
Pages : 43

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Author: Mr.Udaibir S. Das
Publisher: International Monetary Fund
ISBN: 1475505531
Category : Business & Economics
Languages : en
Pages : 128

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This paper provides a comprehensive survey of pertinent issues on sovereign debt restructurings, based on a newly constructed database. This is the first complete dataset of sovereign restructuring cases, covering the six decades from 1950–2010; it includes 186 debt exchanges with foreign banks and bondholders, and 447 bilateral debt agreements with the Paris Club. We present new stylized facts on the outcome and process of debt restructurings, including on the size of haircuts, creditor participation, and legal aspects. In addition, the paper summarizes the relevant empirical literature, analyzes recent restructuring episodes, and discusses ongoing debates on crisis resolution mechanisms, credit default swaps, and the role of collective action clauses.

Author: Marcus Miller
Publisher:
ISBN:
Category : Capital movements
Languages : en
Pages : 42

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Author: Marcus H. Miller
Publisher:
ISBN:
Category :
Languages : en
Pages : 26

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Is sovereign borrowing so different from corporate debt that there is no need for bankruptcy-style procedures to protect debtors? With the waiver of immunity, sovereign debtors who al-ready face severe disruption from short-term creditors grabbing their currency reserves are also exposed to litigious creditors trying to seize what assets they can in a quot;race of the vulturesquot;.Shielding sovereign debtors from inter-creditor conflict by authorized standstills on payments doubtless runs some risk of debtor's moral hazard. But the lack of an orderly procedure for resolving sovereign liquidity crises means that the IMF is de factoforced to bail out countries in trouble. This leads to both debtor and creditor moral hazard, as investors lend without monitoring, knowing that their investments are essentially guaranteed. The strategic case for legalizing standstills is to rescue the international financial system from this quot;time consistentquot; trap.

Author: Jeannette Abel
Publisher: Routledge
ISBN: 9780367182359
Category : Business & Economics
Languages : en
Pages : 0

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This book examines the current mechanisms for solving sovereign debt crises. Ultimately, it explores possible insolvency proceedings for states at EU level and their implementation options.

Author: Marcus Miller
Publisher:
ISBN:
Category : Debts, External
Languages : en
Pages : 30

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Author: Michael K.F Chui
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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This paper offers an analytical framework with which to assess some recent proposals for strengthening the international financial architecture. A model is developed of sovereign liquidity crises that reflect two sources of financial stress?weak fundamentals and self-fulfilling expectations. The nature of the underlying co-ordination game is investigated, as are the properties of the unique equilibrium. In so doing, the paper characterises the welfare costs of belief-driven crises, which are found to be potentially significant. Some recent policy proposals are also evaluated, including prudent debt and liquidity management, capital controls, greater information disclosure, and the efficacy of monetary policy tightening in the midst of crisis.