You Never Give Me Your Money? Sovereign Debt Crises, Collective Action Problems, and IMF Lending

51 Pages Posted: 22 Feb 2013

See all articles by Marco Committeri

Marco Committeri

Banca d'Italia

Francesco Spadafora

Bank of Italy; International Monetary Fund (IMF)

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Date Written: January 2013


We review the impact of the global financial crisis, and its spillovers into the sovereign sector of the euro area, on the international "rules of the game for dealing with sovereign debt crises. These rules rest on two main pillars. The most important is the IMF's lending framework (policies, financing facilities, and financial resources), which is designed to support macroeconomic adjustment packages based on the key notion of public debt sustainability. The complementary pillar is represented by such contractual provisions as Collective Action Clauses (CACs) in sovereign bonds, which aim to facilitate coordination among private creditors in order to contain the costs of a debt default or restructuring. We analyze the most significant changes (and their consequences) prompted by the recent crises to the Fund's lending framework, not only in terms of additional financial resources, new financing facilities (including precautionary ones), and cooperation with euro-area institutions, but also as regards the criteria governing exceptional access to the Fund's financial resources. We highlight a crucial innovation to these criteria, namely that, for the first time, they now explicitly take account of the risk of international systemic spillovers. Finally, we discuss how the recent crises have provided new political support for a broader dissemination of CACs in euro-area sovereign bonds. Importantly, in the first case involving an advanced economy, CACs were activated in the debt exchange undertaken by Greece in Spring 2012.

Keywords: Collective action clauses, Concessional aid, Debt restructuring, Financial crisis, Fund role, IMF financing, Sovereign debt, Sovereign debt restructuring, Systemic spillovers

JEL Classification: F33, F34

Suggested Citation

Committeri, Marco and Spadafora, Francesco, You Never Give Me Your Money? Sovereign Debt Crises, Collective Action Problems, and IMF Lending (January 2013). IMF Working Paper No. 13/20. Available at SSRN:

Marco Committeri (Contact Author)

Banca d'Italia ( email )

Via Nazionale 91
Rome, 00184

Francesco Spadafora

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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