76

In the aftermath of the Mexican crisis of 1994, and against the background of increased reliance by sovereign debtors on bond financing in the early 1990’s, the Group of Ten published in 1996 a report on « The resolution of Sovereign Liquidity Crises». In order to promote a more orderly resolution of such crises, and hence reduce the huge costs involved, the so-called « Rey Report» put much emphasis on the benefits of including collective action clauses (CACs) in sovereign bond issues through a mar- ket-led process. Since 1996, the world has seen several new large debt crises in emerging economies, constituting serious threats for the international financial stability. The debate on the inclusion of CACs – what is called now a « contractual approach» – has regained considerable momentum at the current stage, as has the debate on a « statutory approach», which would imply the establishment of a sovereign debt restructuring mechanism. This article recalls experiences with recent debt crises, and analyses the potential impact of the proposals put forward in the current debate on the behaviour of creditors and debtors. Building on that analysis, the point is made that the statutory and contractual approaches are not only complementary and self-reinforcing, but are even inextricably interlinked, while presumptive access limits to Fund financing act as a catalyst for the functioning of both.