In that context, we initiated and finalized a sovereign-debt restructuring that has – for the first time – tested the collective-action clauses (CACs) that became the new market standard in 2014. By highlighting the failures of the international architecture for resolving sovereign-debt crises, Argentina’s travails set the stage for reform. But in 2018, market expectations about its prospects changed, triggering a deep, prolonged currency crisis that eventually rendered the country’s foreign-currency-denominated public debt unsustainable. To others, however, it was clear that Argentina was confronting a more fundamental problem of macroeconomic inconsistency and debt unsustainability. To complement the new CACs, we must improve the international architecture for sovereign-debt restructuring (a task that the G20 has taken on in the context of the pandemic).

Source: Mint December 31, 2020 17:48 UTC