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Targeted Subordination Of Official Sector Debt, Lee C. Buchheit, Mitu Gulati
Targeted Subordination Of Official Sector Debt, Lee C. Buchheit, Mitu Gulati
Faculty Scholarship
If Greece’s debt is unsustainable, and most observers (including the IMF) seem to think it is, the country’s only source of funding will continue to be official sector bailout loans. Languishing for a decade or more as a ward of the official sector is undesirable from all perspectives. The Greeks bridle under what they see as foreign imposed austerity; the taxpayers who fund the official sector loans to Greece balk at the prospect of shoveling good money after bad. The question then is how to facilitate Greece’s ability to tap the private capital markets at tolerable interest rates. The IMF’s …
The Wonder-Clause, Anna Gelpern, Mitu Gulati
The Wonder-Clause, Anna Gelpern, Mitu Gulati
Faculty Scholarship
The Greek debt crisis prompted EU officials to embark on a radical reconstruction of the European sovereign debt markets. Prominently featured in this reconstruction was a set of contract provisions called Collective Action Clauses, or CACs. CACs are supposed to help governments and private creditors to renegotiate unsustainable debt contracts, and obviate the need for EU bailouts. But European sovereign debt contacts were already amenable to restructuring; adding CACs could make it harder. Why, then, promote CACs at all, and cast them in such a central role in the market reform initiative? Using interviews with participants in the initiative and …
Walking Back From Cyprus, Lee C. Buchheit, Mitu Gulati
Walking Back From Cyprus, Lee C. Buchheit, Mitu Gulati
Faculty Scholarship
Last Friday, the European leaders trespassed on consecrated ground by putting insured depositors in Cypriot banks in harm’s way. They had other options, none of them pleasant but some less ominous than the one they settled on.