Sovereign Debt Restructuring Mechanism
BANKING LAW 12TH TRIMESTER
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Sovereign Debt Restructuring Mechanism:
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Is It Time For A New Order?
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ANALYSING IMF’S SOVEREIGN DEBT RESTRUCTURING MECHANISM: A MISMATCH DURING THE FINANCIAL DOWNTURN
SUBMITTED BY:
SARTAJ K. SINGH I.D. NO.: 1675 &
NAMRATA SHAH I.D.NO.: 1676
4TH YEAR
B.A.LL.B. {HONS.}
DATE OF SUBMISSION: 16TH MAY 2012
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TABLE OF CONTENTS
1.0 INTRODUCTION 2
2.0 ANALYSIS OF THE SOVEREIGN DEBT RESTRUCTURING MECHANISM IN EU: THE BAILOUT AND LENDING SYSTEM 3 2.1 THE CONCEPT OF SOVEREIGN DEBT & THE RESTRUCTURING MECHANISM 4 2.2 THE CURRENT SOVEREIGN DEBT CRISIS IN THE EUROPEAN UNION 5 2.3 ROLE OF THE IMF IN TACKLING THE CRISIS 5
3.0 INSIGHT OF THE IMPORTANCE OF A SDRM: THE PUBLIC LAW ALTERNATIVE 10 3.1 SDRM: A NEED BASED PUBLIC LAW APPROACH 10 3.2 SDRM: DETERMINING A BETTER MODEL TO REPLACE THE CONTEMPORARY 11 3.3 BENEFITS OF A STATUTORY FRAMEWORK FOR SDRM 13
4.0 SDRM MODEL: THE EMULATED AND EVOLVED ALTERNATIVE 13 4.1 THE INGREDIENTS OF THE IMF PROPOSAL 14 4.2 LEARNING FROM EXPERIENCE: THE CASE OF MEXICO AND URUGUAY 15 4.3 EVOLVING AN IDEAL SDRM 16
5.0 CONCLUSION 17
6.0 BIBLIOGRAPHY 19
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1.0 INTRODUCTION
“If the facts don’t fit the theory, change the facts.”
The above mentioned words though said by Albert Einstein would not be the plausible plan of action that can be adopted while dealing the recent sovereign debt crises which has affected the European Union in the aftermath of the 2008 financial crisis. In light of the debt-stricken conditions of multiple European nations, the role of the International Monetary Fund (IMF) is set yet again to undergo change with its debt reforms
-------------------------------------------------
Sovereign Debt Restructuring Mechanism:
-------------------------------------------------
Is It Time For A New Order?
-------------------------------------------------
ANALYSING IMF’S SOVEREIGN DEBT RESTRUCTURING MECHANISM: A MISMATCH DURING THE FINANCIAL DOWNTURN
SUBMITTED BY:
SARTAJ K. SINGH I.D. NO.: 1675 &
NAMRATA SHAH I.D.NO.: 1676
4TH YEAR
B.A.LL.B. {HONS.}
DATE OF SUBMISSION: 16TH MAY 2012
-------------------------------------------------
TABLE OF CONTENTS
1.0 INTRODUCTION 2
2.0 ANALYSIS OF THE SOVEREIGN DEBT RESTRUCTURING MECHANISM IN EU: THE BAILOUT AND LENDING SYSTEM 3 2.1 THE CONCEPT OF SOVEREIGN DEBT & THE RESTRUCTURING MECHANISM 4 2.2 THE CURRENT SOVEREIGN DEBT CRISIS IN THE EUROPEAN UNION 5 2.3 ROLE OF THE IMF IN TACKLING THE CRISIS 5
3.0 INSIGHT OF THE IMPORTANCE OF A SDRM: THE PUBLIC LAW ALTERNATIVE 10 3.1 SDRM: A NEED BASED PUBLIC LAW APPROACH 10 3.2 SDRM: DETERMINING A BETTER MODEL TO REPLACE THE CONTEMPORARY 11 3.3 BENEFITS OF A STATUTORY FRAMEWORK FOR SDRM 13
4.0 SDRM MODEL: THE EMULATED AND EVOLVED ALTERNATIVE 13 4.1 THE INGREDIENTS OF THE IMF PROPOSAL 14 4.2 LEARNING FROM EXPERIENCE: THE CASE OF MEXICO AND URUGUAY 15 4.3 EVOLVING AN IDEAL SDRM 16
5.0 CONCLUSION 17
6.0 BIBLIOGRAPHY 19
-------------------------------------------------
1.0 INTRODUCTION
“If the facts don’t fit the theory, change the facts.”
The above mentioned words though said by Albert Einstein would not be the plausible plan of action that can be adopted while dealing the recent sovereign debt crises which has affected the European Union in the aftermath of the 2008 financial crisis. In light of the debt-stricken conditions of multiple European nations, the role of the International Monetary Fund (IMF) is set yet again to undergo change with its debt reforms
Bibliography: 2. A. Chandavarkar, “Is the IMF a Lender of First or Last Resort?” 37(37) Economic and Political Weekly (September 2002) at 3699. 3. A. Krueger, “Sovereign Debt Restructuring: Messy or Messier?” 93 The American Economic Review (May, 2003) at 73. 4. A. M. Dickerson, “A Politically Viable Approach to Sovereign Debt Restructuring” 53 Emory Law Journal (2004) at 997. 5. A. O. Krueger, “A New Approach to Sovereign Debt Restructuring” International Monetary Fund (2002) available at https://www.imf.org/external/pubs/ft/exrp/sdrm/eng/sdrm.pdf 6 7. C. N. Bower and G. F. Rea, “Restructuring Sovereign Debt” 77 American Society of International Law (April 1983) at 312. 8 9. D.K. Tarullo, “Neither Order Nor Chaos: The Legal Structure Of Sovereign Debt Workouts” 53 Emory Law Journal (2004) at 657. 10 11. J. M. Hays II, “The Sovereign Debt Dilemma” 75 Brooklyn Law Review (Spring, 2010) at 905. 12 13. J.M. Hays, “The Sovereign Debt Dilemma?” 75 Brooklyn Law Review (2010) at 6. 14. M. Giovanoli, “The Reform Of The International Financial Architecture After The Global Crisis” 42 New York University Journal of International Law & Politics (2009) at 81. 15 16. M. Quirk, “Sovereign Default: A Detour on the Road to Recovery” 29 Review of Banking and Financial Law Spring (2010) at 342. 17 18. N. woods, “Understanding Pathways Through Financial Crises and the Impact of the IMF: An Introduction” 12(4) Global Governance (October–December 2006) at 373. 19. O. Eldar “Reform of IMF Conditionality: A Proposal for Self-Imposed Conditionality” 8 Journal of International Economic Law (June, 2005) at 508. 20 21. R. Euliss, “The Feasibility of the IMF 's Sovereign Debt Restructuring Mechanism: An Alternative Statutory Approach to Mollify American Reservations” 19(1) American University International Law Review (2003) at 108. 22 23. R.O. Caminal, “Is there a Need for an International Insolvency Regime in the Context of Sovereign Debt? A Case for the use of Corporate Debt Restructuring Techniques” 24 Journal of International Banking Law and Regulation (2009) at 9. 24. S. Hagan and A. O. Krueger, “Sovereign Work-Outs: An IMF Perspective” 6 Chicago Journal of International Law (Summer 2005) at 203. 25 26. S. L. Schwarcz, “Idiot’s Guide to Sovereign Debt Restructuring” 53 Emory Law Journal (2004) at 1189. 27. S. L. Schwarcz, “Sovereign Debt Restructuring: A Bankruptcy Reorganization Approach” 85 Cornell Law Review (2001) at 956. 28. V. Jordon, “ A Bankruptcy Court For Countries: A New Approach to Sovereign Debt Restructuring” 54(3) Social and Economic Studies (September 2005) at 50. 2. Anonymous, “Eurozone Debt Web: Who Owes What to Whom?” BBC News (18th November 2011) available at http://www.bbc.co.uk/news/business-15748696 3 4. D. Gow and I. Traynor, “Eurozone Finance Ministers turn to IMF to help Bailout fund” The Guardian (29th November 2011) available at http://www.guardian.co.uk/business/2011/nov/29/eurozone-finance-ministers-imf-bailout-fund 5 2. IMF, “Europe and IMF Agree €110 Billion Financing Plan With Greece,” The International Monetary Fund (2nd May, 2010) available at http://www.imf.org/external/pubs/ft/survey/so/2010/car050210a.htm. 3 [ 2 ]. R. Euliss, “The Feasibility of the IMF 's Sovereign Debt Restructuring Mechanism: An Alternative Statutory Approach to Mollify American Reservations” 19(1) American University International Law Review (2003) at 108. [ 5 ]. Anonymous, “Timeline: The Unfolding Eurozone Crisis” BBC News (19th April 2012) available at http://www.bbc.co.uk/news/business-13856580 (last visited on 14th May 2012). [ 14 ]. IMF, “IMF and Europe” The International Monetary Fund (13th April 2012) available http://www.imf.org/external/np/exr/facts/europe.htm (last accessed on 14th May 2012). [ 18 ]. Supra note 14. A. Chandavarkar, “Is the IMF a Lender of First or Last Resort?” 37(37) Economic and Political Weekly (September 2002) at 3699. [ 20 ]. R. Kroszner, “Sovereign Debt Restructuring” 93(2) The American Economic Review (May 2003) at 75. [ 21 ]. D. K. Tarullo, “The Role of IMF in Sovereign Debt Restructuring” 6 Chicago Journal of International Law (Summer 2005) at 287. [ 26 ]. M. Quirk, “Sovereign Default: A Detour on the Road to Recovery” 29 Review of Banking and Financial Law Spring (2010) at 342. [ 27 ]. J. Sedlak, “Sovereign Debt Restructuring: Statutory Reform or Contractual Solution?” 152(4) University of Pennsylvania Law Review (April 2004) at 1483. [ 28 ]. A. O. Krueger, “A New Approach to Sovereign Debt Restructuring” International Monetary Fund (2002) available at https://www.imf.org/external/pubs/ft/exrp/sdrm/eng/sdrm.pdf (last accessed on 14th May 2012). This report changed the concept of SDRM. [ 29 ]. S. Hagan and A. O. Krueger, “Sovereign Work-Outs: An IMF Perspective” 6 Chicago Journal of International Law (Summer 2005) at 203. [ 30 ]. M. M. Spiegal, “Towards a Sovereign Debt Restructuring Mechanism” 19 FRBSF Economic Letter (November 2002) at 1. [ 31 ]. P. Bolton, “Towards A Statutory Approach to Sovereign Debt Restructuring: Lessons from Corporate Bankruptcy practice around the World” 50 International Monetary Fund Third Annual Research Conference (2003) at 41. [ 33 ]. C. N. Bower and G. F. Rea, “Restructuring Sovereign Debt” 77 American Society of International Law (April 1983) at 312. [ 34 ]. S. L. Schwarcz, “Idiot’s Guide to Sovereign Debt Restructuring” 53 Emory Law Journal (2004) at 1189. [ 38 ]. S. Hagan, “Designing a Legal Framework to Restructure Sovereign Debt” 6 Georgetown Journal of International Law (Winter, 2005) at 299. [ 41 ]. A.M. Dickerson, “A Politically Viable Approach to Sovereign Debt Restructuring” 53 Emory Law Journal (2004) at 8. [ 43 ]. D.K. Tarullo, “Neither Order Nor Chaos: The Legal Structure of Sovereign Debt Workouts” 53 Emory Law Journal (2004) at 11. [ 44 ]. J.M. Hays, “The Sovereign Debt Dilemma?” 75 Brooklyn Law Review (2010) at 6. [ 46 ]. R.O. Caminal, “Is there a Need for an International Insolvency Regime in the Context of Sovereign Debt? A Case for the use of Corporate Debt Restructuring Techniques” 24 Journal of International Banking Law and Regulation (2009) at 9. [ 48 ]. A. Krueger, “Sovereign Debt Restructuring: Messy or Messier?” 93 The American Economic Review (May, 2003) at 73.