Andritzky, Jochen, Feld, Lars P, Schmidt, Christoph M, Schnabel, Isabel, Wieland, Volker, (2016), “Creditor participation clauses: Making orderly sovereign debt restructuring feasible in the Eurozone”, Voxeu, 21 July
To make the no-bailout clause credible and to enhance the effectiveness of crisis assistance, private creditors should contribute to crisis resolution in the Eurozone. This column proposes a mechanism to allow for orderly restructuring of sovereign debt as part of ESM programmes. If debt exceeds certain thresholds, the mechanism triggers an immediate maturity extension. In a second stage, a deeper debt restructuring could follow, depending on the solvency of a country. The mechanism could be easily implemented by amending ESM guidelines.
Relevant Posts
- Ongena, Steven, Popov, Alexander, Van Horen, Neeltje, (2016), “The invisible hand of the government: “Moral suasion” during the European sovereign debt crisis”, European Central Bank, Working papers 1937, July
- Andrésa, Javier, Boscáb, José E., Ferric, Javier, (2016), “Instruments, rules, and household debt: the effects of fiscal policy”, Oxford Economic Papers, 4 February
