Frameworks for Sovereign Debt Restructuring
Recent events--especially the difficulties faced by Argentina--have reminded us of the risks of not having orderly Frameworks for Sovereign Debt Restructuring. Its absence has led to the emergence of destabilizing speculative behavior in international debt markets and has delayed the resolution of sovereign debt crises. Delays in debt restructurings have been costly for sovereigns and for good-faith investors.
The potential adverse effects for global economic, political, and social stability that the lack of these frameworks implies make their design and implementation a matter of urgencya claim that has been recently endorsed by a resolution of the United Nations.
The International Monetary Fund recognized the need for implementing these frameworks in 2001.
Over the past fifteen years discussions have explored many alternatives, and their economic, political, and social consequences. Each has to be evaluated in terms of ex ante incentives is there, in some sense too much or too little lending? How is lending distributed across countries? Is lending done on the right terms? Do the lenders have the right incentives for due diligence? And do the borrowers for prudent lending? as well as ex post incentives: when a problem occurs, are there incentives for a timely resolution, without undue delay? Are there incentives for a fair and efficient resolution, one that enables the indebted country to return to growth quickly, which does not impose undue hardship on its citizens, and provides fair compensation to the creditors?
Some have suggested that simple modifications of the current contractual approach are all that is required. Others claim that some sovereign debt restructuring mechanism would be desirable.
This conference will bring together academics and other experts, who will discuss these issues and will provide guidance on (a) what kinds of contractual reforms would facilitate a better working of sovereign debt markets? (b) What are the limits of the private contractual approach? What are the benefits and limits of a statutory approach? Do contractual approaches help address the problems posed by these limitations? How might these be structured in order to promote a more efficient and equitable market for international debt? Are there intermediate approaches, involving soft law, that might facilitate the functioning of sovereign debt markets?
More generally, the conference will provide insights on how the market-based approach can be complemented by a legal framework that replicates the functions of a national bankruptcy court.
Speakers include Jan Svejnar, Center on Global Economic Governance; Jose Antonio Ocampo, Columbia University; Patrick Bolton, Columbia University; Benu Schneider, United Nations; Joseph Stiglitz, Columbia University; Lee Buchheit; Sean Hagan, IMF; Domenico Lombardi, CIGI; and many more.
By Invitation Only.
Barbara and David Zalaznick Professor of Business
Columbia University Business School
Marilou Jane D. Uy
Sector Director, Africa Finance and Private Sector Development Department
The World Bank
Cleary, Gottlieb, Steen & Hamilton
Postdoctoral Research Scholar
Graduate School of Business
Assistant General Council
International Monetary Fund
Innovative Partners LLC
Timothy B. DeSieno
Bingham McCutchen LLP
Visiting Senior Fellow, Graduate Program
The New School
Global Economy Program
New York University
José Antonio Ocampo
Initiative for Policy Dialogue (IPD)
New York Times
Department of Economics
University of Vienna
Overseas Development Institute
Guilherme de Aguiar Patriota
Brazilian Ambassador to the United Nations
Brazilian Mission to the UN
Senior Economic Affairs Officer
Bank of Canada
Initiative for Policy Dialogue (IPD)
James T. Shotwell Professor of Global Political Economy; Director, Center on Global Economic Governance
School of International and Public Affairs, Columbia University
8:30-9:00am Breakfast and Introduction to the Conference
Jan Svejnar, Columbia University
9:00-10:00am : Implications of recent events
- - Implications of the Argentine Sovereign Debt restructuring and litigation for the international financial architecture
- - The United Nations Resolution Towards a multilateral legal framework for sovereign debt restructuring processes.
Panelists: Lee Buchheit (Cleary Gottlieb Steen & Hamilton LLP, New York); Sergio Chodos (IMF, Alternate Executive Director for Argentina); Guilherme de Aguiar Patriota (United Nations, DPR from Brazil)
- - Current Debate on the Reform of the IMF Lending Framework
Panelists: Susan Schadler (CIGI); Hugh Bredenkamp (IMF)
Moderated by José Antonio Ocampo (Columbia University)
10:00-10:30am Objectives and Challenges of Sovereign Debt Restructuring
Keynote Speaker: Joseph E. Stiglitz (Columbia University)
10:30-10:45am Coffee break
10:45-12:45pm The private contractual approach
- - Issues in sovereign debt restructuring
- - Can the private contractual approach provide an efficient and equitable solution to SDR?
- - What is the optimal design of contracts?
- - Collective Action Clauses. How do we weigh different classes of creditors? How do we determine priority with bonds issued under multiple jurisdictions?
- - Champerty. Can it be included in bond contracts?
- - Aggregation and Pari passu
- - How can provisions of Chapter 9 be incorporated into contracts?
- - What are the limitations of the private contractual approach?
- - Lending into arrears
- - Standstills in debt contracts
- - Credit Default Swaps. Issues of transparency and disclosure
- - Can provisions of Chapter 11 be embedded into contracts?
- - Role for GDP indexed bonds
- - Role for GDP indexed bonds
Panelists: Lee Buchheit (Cleary Gottlieb Steen & Hamilton LLP, New York); Richard Conn (Conn International Group); Jonathan Eaton (Brown University); Eric Santor, Bank of Canada; Jim Haley (CIGI); Robert Howse (New York University); Joseph E. Stiglitz (Columbia University); Timothy B. DeSieno, (Bingham McCutchen LLP)
Moderated by Martin Guzman (Columbia University)
12:45-2:15pm Lunch / Discussion on the Context of the Debate
(This Panel will not be open to the public)
- The view of the IMF
- The view of the UN
- Should the recent decision be viewed as an aberration, and are there quick fixes?
Sean Hagan (IMF); Domenico Lombardi (CIGI); Benu Schneider (UN)
Moderated by Jan Svejnar (Columbia University)
2:30-4:30pm Proposals for a multilateral legal framework for sovereign debt restructuring
- - Provisions for an International Bankruptcy Law
- - The reach of the soft law
- - The institutional structure
- - The institutional process to create it
- - Improvements over the Paris Club ongoing process
Panelists: Patrick Bolton (Columbia University); Barry Herman (New School); Brett House (CIGI); Jurgen Kaiser (erlassjahr.de NGO); José Antonio Ocampo (Columbia University); Kunibert Raffer (University of Vienna); Shari Spiegel (United Nations)
Moderated by Joseph E. Stiglitz (Columbia University)
4:30-4:40pm Coffee Break
4:40-5:10pm Conclusions Towards a Consensus
Leaders: Jan Svejnar (Columbia University); Marilou Uy (G24, Director)