Every country has some form of domestic bankruptcy procedures, whereby debtors who are unable to repay can come to some equitable collective settlement with their creditors. International debt, however, has no such set of resolution procedures. As international capital flows have increased dramatically over the past two decades, this lacuna has become more serious. Former International Monetary Fund chief economist Olivier Blanchard sees substantial progress in new measures developed in the IMF. How much of a breakthrough is this in practice?
The new procedures address a problem that occurs when a country needs emergency support from the IMF. As Blanchard explains …read more