This paper examines the position of investors holding Greek sovereign bonds after the restructuring (PSI) which took place in 2012. After briefly reviewing the main features of the PSI, the paper undertakes to verify whether investors could challenge the operation on the basis of their property...

This chapter is on quantitative models of sovereign debt crises in emerging economies. We interpret debt crises broadly to cover all of the major problems a country can experience while trying to issue new debt, including default, sharp increases in the spread and failed auctions. We examine the...

This paper surveys the literature on sovereign debt from the perspective of understanding how sovereign debt differs from privately issue debt, and why sovereign debt is deemed safe in some countries but risky in others. The answers relate to the unique power of the sovereign. One the one hand,...

We study optimal bailout policies in the presence of banking and sovereign crises. First, we use European data to document that asset guarantees are the most prevalent way in which sovereigns intervene during banking crises. Then, we build a model of sovereign borrowing with limited commitment,...

This paper investigates the link between financial crises in developing countries and the variation of bank deposits in offshore financial centers. Using both a two-way fixed effects and a stacked difference-in-differences estimator, we find that after three years since the beginning of the...

This paper provides an overview of the ongoing debate on the international Sovereign Debt Restructuring Mechanism (SDRM) architecture by highlighting two key aspects, the contractual and the statutory approach, while also alluding to alternatives that have been set forth, such as arbitration,...

We revisit the occurrence of self-fulfilling crises in sovereign debt markets under time-varyinginterest rates and growth. We show that, when long-term interest rates exceed growth, insolvencyis solely caused by the exhaustion of the sovereign’s debt repayment capacity subject to...

Emerging countries in many cases are more crisis-prone than highly developed industrialized countries. This is in many cases due to a weak or volatile financial sector. The best policy to strengthen crisis resistance is the building up of a sound financial position. A sound financial position of...