Looking Forward: 2005-2010 A Sovereign Debt Restructuring Reverie

In a prior article, the author asked why, if a sovereign debt restructuring treaty would be effective and easy to implement, one does not yet exist. There appeared to be at least three reasons: the very novelty of the approach; the opposition of interest groups who believe that a treaty approach would make it too easy for sovereign debtors to default; and the failure of parties to appreciate the importance of a treaty approach, coupled with concern over ceding sovereignty. In this short reverie, the author hopes to show that these reasons are flawed and that, even where bond issues already include collective action clauses, a treaty approach would benefit both debtor-nations and their creditors.