A Vulture's Gamble: High-Stakes Interpretation of Sovereign Debt Contracts in NML Capital, Ltd. v. Republic of Argentina

2013 ◽  
Author(s):  
Theresa Monteleone
Keyword(s):  
Sovereign Debt ◽  
Debt Contracts ◽  
High Stakes

7. Policy-Making under Economic and Monetary Union Crisis, Change, and Continuity

2017 ◽  
Author(s):  
Dermot Hodson
Keyword(s):  
Monetary Union ◽  
Euro Area ◽  
Sovereign Debt ◽  
Policy Making ◽  
De Novo ◽  
Debt Crisis ◽  
Policy Coordination ◽  
Financial Supervision ◽  
Economic And Monetary Union ◽  
High Stakes

This chapter examines the role of the economic and monetary union (EMU) in the European Union’s macroeconomic policy-making. As of 2015, nineteen members of the euro area have exchanged national currencies for the euro and delegated responsibility for monetary policy and financial supervision to the European Central Bank (ECB). EMU is a high-stakes experiment in new modes of EU policy-making insofar as the governance of the euro area relies on alternatives to the traditional Community method, including policy coordination, intensive transgovernmentalism, and delegation to de novo bodies. The chapter first provides an overview of the origins of the EMU before discussing the launch of the single currency and the sovereign debt crisis. It also considers variations on the Community method, taking into account the ECB and the European Stability Mechanism.

Courts, Sovereign Immunity, and Credible Commitment in Sovereign Debt Markets

2019 ◽  
Author(s):  
W. Mark C. Weidemaier
Keyword(s):  
Sovereign Debt ◽  
Credible Commitment ◽  
Debt Contracts ◽  
Sovereign Immunity ◽  
Conventional View ◽  
Legal Enforcement ◽  
Legal Remedies ◽  
Debt Markets ◽  
Mandatory Rules

This chapter revisits the role of legal enforcement in sovereign debt markets. The conventional view is that the law of sovereign immunity denies creditors effective legal remedies. To many observers, weak legal enforcement is problematic, for effective legal remedies would facilitate credible repayment commitments. Though substantially correct, this perspective is also flawed. The assumption that creditors lack effective remedies implicitly treats sovereign immunity as a set of mandatory rules. In fact, sovereign lenders can and do bargain for greater enforcement rights. When courts enforce these bargains, legal remedies gain potency. Yet potent remedies need not improve the functioning of debt markets. Courts can create effective remedies against sovereign debtors only by imposing significant costs on third parties. Many loan debt contracts are drafted so as to maximize these externalities. The important question—given short shrift thus far—is whether the credibility-enhancing virtues of legal enforcement justify the costs.

scholarly journals A Seniority Arrangement for Sovereign Debt

2015 ◽  
Vol 105 (12) ◽  
pp. 3740-3765 ◽  
Author(s):  
Satyajit Chatterjee ◽  
Burcu Eyigungor
Keyword(s):  
Sovereign Debt ◽  
Realistic Model ◽  
Priority Rule ◽  
Debt Contracts ◽  
Absolute Priority ◽  
Course Of Action ◽  
The Absolute ◽  
Debt Dilution ◽  
Normative Implications

A sovereign’s inability to commit to a course of action regarding future borrowing and default behavior makes long-term debt costly (the problem of debt dilution). One mechanism to mitigate this problem is the inclusion of a seniority clause in debt contracts. In the event of default, creditors are to be paid off in the order in which they lent (the “absolute priority” or “first-in-time” rule). In this paper, we propose a modification of the absolute priority rule suited to sovereign debts contracts and analyze its positive and normative implications within a quantitatively realistic model of sovereign debt and default. (JEL E32, E44, F34, G15, H63, O16, O19)

scholarly journals Political Risk and Sovereign Debt Contracts

2011 ◽  
Author(s):  
Stephen J. Choi ◽  
G. Mitu Gulati ◽  
Eric A. Posner
Keyword(s):  
Sovereign Debt ◽  
Political Risk ◽  
Debt Contracts

The Long March towards an International Legal Framework for Sovereign Debt Restructuring

2015 ◽  
Vol 6 (2) ◽  
Author(s):  
Yuefen Li
Keyword(s):  
United Nations ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Legal Framework ◽  
Debt Contracts ◽  
Debt Restructuring ◽  
Technical Problems ◽  
International Financial Architecture ◽  
The United Nations ◽  
Heating Up

AbstractThe lack of a formal sovereign debt restructuring legal framework has been considered by many as a serious deficit or missing link in the international financial architecture. However, even though the international debates on the topic have been going on for decades, heating up each time with the onset of a debt crisis and cooling down when the crises was contained, up to now such debates have not yet come to final fruition. Nevertheless the topic has never been put to sleep because of frequent and severe debt crises. These crises have never failed to demonstrate the need of a legal framework, even more so this time around. Yet, the international community chose to work on improvement of debt contracts even though it cannot redress the systemic and technical problems facing debt restructurings. In 2014, the United Nations started to work on a legal framework on debt restructuring facing political resistance and misconstrued fears of a legal framework. After more than a year’s hard work, the United Nations passed through vote a resolution on basic principles on debt restructuring processes. This is an important milestone, yet the march towards a formal legal framework is going to be long.

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