Josesph Stiglitz is (as usual) required reading here: www.project-syndicate.org/…
Every advanced country has a bankruptcy law, but there is no equivalent framework for sovereign borrowers. That legal vacuum matters, because, as we now see in Greece and Puerto Rico, it can suck the life out of economies.
… nine precepts – namely, a sovereign’s right to initiate a debt restructuring, sovereign immunity, equitable treatment of creditors, (super) majority restructuring, transparency, impartiality, legitimacy, sustainability, and good faith in negotiations –
… [received[ overwhelming support … with 136 UN members voting in favor …
All six countries that voted against the UN resolution (the US, Canada, Germany, Israel, Japan, and the United Kingdom) … are leading creditor countries, with [perhaps] no desire to embrace restrictions on their powers.
What is the alternative? A different proposal by...
The International Capital Market Association (ICMA), supported by the IMF and the US Treasury, ... proposal promotes collusive behavior among the major financial centers: The only creditors whose votes would count for the activation of CACs [collective action clauses] would be those who owned bonds issued under a restricted set of jurisdictions. And it does nothing to address the severe inequity between formal creditors and implicit ones (namely, the pensioners and workers to whom sovereign debtors also have obligations) who would have no say in a restructuring proposal.