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The Future of the International Monetary System

Edited by Marc Uzan

Is the international financial architecture debate over? Not according to leading experts gathered together in this impressive volume who try to identify the key trends that will fashion the international financial system in the years ahead. As history has shown, the evolution of the international monetary system is a slow process. However, the authors argue that we may be entering a new era in which a combination of factors will have lasting consequences on the functioning of the international monetary system and the future role of the IMF.
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Chapter 6: Sovereign debt restructuring: the future case of Argentina

Daniel Marx


* Daniel Marx INTRODUCTION The Argentine economy is currently facing the challenge of restructuring its sovereign debt, which has been in default since December 2001. More than a year later, this issue is still pending. Discussions on the Argentine situation in particular and debt restructuring in general are taking place within a broader international debate regarding the consequences of increased capital mobility, with special focus on emerging economies. Within the frame of these discussions one central aspect is related to what debt resolution approach the countries should adopt in the event of a crisis, and, in particular what role both the multilateral institutions and the private sector should play in these circumstances, and what should be the extent of their involvement. In developing a general framework to deal with financial crises, the use of certain guidelines would help the resolution process. The Argentine debt restructuring will be a case where these should be spelled out more clearly. It is questionable whether multilateral institutions should put together large packages of financial assistance to finance sovereign debts that are perceived as unsustainable. It is often said that creditors should not be bailed out. The thinking behind this is that both the debtors (countries) and their creditors should learn from their past mistakes. The costs of crises should be distributed among all stakeholders. Moreover, given the growth in the amount of capital flows, official monies become insufficient to resolve the crises by themselves, implying that a higher involvement of the private sector...

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