The Wonder-Clause

64 Pages Posted: 30 Sep 2013 Last revised: 4 Jul 2016

See all articles by Anna Gelpern

Anna Gelpern

Georgetown University Law Center

Mitu Gulati

University of Virginia School of Law

Date Written: 2013


The Greek debt crisis prompted EU officials to embark on a radical reconstruction of the European sovereign debt markets. Prominently featured in this reconstruction was a set of contract provisions called Collective Action Clauses, or CACs. CACs are supposed to help governments and private creditors to renegotiate unsustainable debt contracts, and obviate the need for EU bailouts. But European sovereign debt contacts were already amenable to restructuring; adding CACs could make it harder. Why, then, promote CACs at all, and cast them in such a central role in the market reform initiative? Using interviews with participants in the initiative and those affected by it, as well as observations at policy and academic meetings, we attempt to shed light on the puzzle and draw implications for the role of contract techniques in market construction.

Keywords: legal theory of finance, Eurozone, sovereign debt, collective action clauses

JEL Classification: F34, F55, F65, G15, G20, G28, H63, H81, K2, N20, P16, P43, P48

Suggested Citation

Gelpern, Anna and Gulati, Mitu, The Wonder-Clause (2013). Journal of Comparative Economics, Vol. 41, pp. 367-385, 2013, Available at SSRN:

Anna Gelpern (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

Mitu Gulati

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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