The Mystery of the Missing Sovereign Debt Restructuring Mechanism

Posted: 30 Jun 2008

See all articles by Eric Helleiner

Eric Helleiner

University of Waterloo - Department of Political Science

Date Written: 2008

Abstract

The absence of a formal international regulatory mechanism to facilitate sovereign debt restructuring has long been recognized as a most serious gap in the architecture of global finance. Why has it proven so difficult to create such a sovereign debt restructuring mechanism (SDRM) at the international level? Political economists have devoted relatively little scholarly attention to this question. This paper attempts to begin to fill this gap in the literature by examining four failed initiatives to create a SDRM over the past century. In place of a realist or structural Marxist account, the paper puts forward a more contingent explanation for these failures that highlights three distinct political problems that must be overcome in the construction of a SDRM: (1) collective action problems on both the side of sovereign debtors and that of private foreign creditors; (2) basic distributional conflicts embodied in any debt restructuring effort; and (3) the uncertain behavior of the private creditors' home states.

Suggested Citation

Helleiner, Eric, The Mystery of the Missing Sovereign Debt Restructuring Mechanism (2008). Contributions to Political Economy, Vol. 27, Issue 1, pp. 91-113, 2008. Available at SSRN: https://ssrn.com/abstract=1153219 or http://dx.doi.org/bzn003

Eric Helleiner (Contact Author)

University of Waterloo - Department of Political Science ( email )

200 University Avenue West
Waterloo, Ontario N2L 6C2
Canada

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