Tag Archives: Debt restructuring

IMF Policy Vis-a-vis Greece

Christoph Eisenring reports in the NZZ about a critical internal assessment of the IMF’s recent policy vis-a-vis Greece. The relaxation of the “medium term solvency” requirement for IMF lending in a situation of acute contagion risk should be reconsidered; contagion should be addressed with different instruments; debt should be restructured earlier than happened in the Greek case; and bail-ins should be favoured.

Haircut Estimates for 180 Sovereign Debt Restructurings

Juan Cruces and Christoph Trebesch have posted data on 180 sovereign debt restructurings between 1978 and 2010. They analyse this data in a paper forthcoming in the American Economic Journal: Macroeconomics.

Cruces and Trebesch consider distressed restructurings of medium and long-term public or publicly guaranteed debt with foreign private creditors (including commercial banks and bondholders but excluding official creditors organised in the Paris Club) that were ever finalized. Their preferred haircut measure varies between -10% (Brazil, February 1983) and 97% (Republic of Yemen, February 2001).

“Die Zukunft des Euros (The Euro’s Future),” FuW, 2011

Finanz und Wirtschaft, February 23, 2011. PDF. Ökonomenstimme, March 1, 2011. HTML.

  • A banking crisis doesn’t imply a currency crisis.
  • Spreads on periphery bonds signal credibility of the ECB.
  • Debt restructuring must not be excluded as a policy option.