Unresolved sovereign debt problems are hurting debtor nations, their citizens and their creditors, and also can pose serious systemic threats to the international financial system. The existing contractual restructuring approach is insufficient to make sovereign debt sustainable. Although a more systematic legal resolution framework is needed, a formal multilateral approach, such as a treaty, is not currently politically viable. An informal model-law approach should be legally, politically and economically feasible. This informal approach would not require multilateral acceptance. Because most sovereign debt contracts are governed by either New York or English law, it would be sufficient if one or both of those jurisdictions enacted a proposed Sovereign Debt Restructuring Model Law as their domestic law.
Steven L. Schwarcz, A Model-Law Approach to Restructuring Unsustainable Sovereign Debt (CIGI, Policy Brief no. 64, August 2015)
Library of Congress Subject Headings
Public debts, Debt relief, International finance--Law and legislation, Financial crises