Collective Action Clauses and Sovereign Debt Restructuring Frameworks: Why and When is Restructuring Appropriate

EUROPEAN FINANCIAL INFRASTRUCTURE IN THE FACE OF NEW CHALLENGES, ed. by Franklin A., Carletti E., Gulati M. and Zettelmeyer J., 2019

10 Pages Posted: 3 Jun 2019

See all articles by Giampaolo Galli

Giampaolo Galli

Osservatorio sui Conti Pubblici Italiani dell'Università Cattolica, Roma; Luiss-Sep

Date Written: April 25, 2019

Abstract

This paper discusses some of the legal aspects of Collective Action Clauses (CACs) in the context of the Eurozone and then approaches the broader economic issue of why it may be useful to have more efficient CACs, such as single-limb CACs, and when and in what circumstances it may be appropriate to restructure sovereign debts. Whatever Eurozone authorities will do with ESM rules and CACs, it is crucial not to repeat the mistake that was done in 2010 in Deauville. When markets learnt about PSI, contagion effects were significant and markets were destabilized in several Eurozone countries.

Keywords: sovereign debt, restructuring, default, Italy, Collective Action Clauses, Deauville

JEL Classification: H63, K12, K22

Suggested Citation

Galli, Giampaolo, Collective Action Clauses and Sovereign Debt Restructuring Frameworks: Why and When is Restructuring Appropriate (April 25, 2019). EUROPEAN FINANCIAL INFRASTRUCTURE IN THE FACE OF NEW CHALLENGES, ed. by Franklin A., Carletti E., Gulati M. and Zettelmeyer J., 2019. Available at SSRN: https://ssrn.com/abstract=3386125

Giampaolo Galli (Contact Author)

Osservatorio sui Conti Pubblici Italiani dell'Università Cattolica, Roma ( email )

Largo Francesco Vito, 1
Roma, 00168
Italy
3358315044 (Phone)

Luiss-Sep ( email )

Via O. Tommasini 1
Rome, Roma 00100
Italy

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