A Viable Insolvency Procedure for Sovereigns in the Euro Area

Bibliographic Data

ID7876062
AuthorsClemens Fuest (0009-0008-7698-8648, Centre for European Economic Research (ZEW), Mannheim, and University of Mannheim), Friedrich Heinemann (0000-0003-3501-0199, Centre for European Economic Research (ZEW), Mannheim, and University of Heidelberg, corresponding author), Christoph Schröder (0000-0001-7030-7655, Centre for European Economic Research (ZEW), Mannheim)
Year2016
Volume54
Issue2
Pages301-317
Publication date2016-03-01
Open AccessYes
TypeARTICLE
VenueJCMS Journal of Common Market Studies (JOURNAL)
Journal identifiersISSN: 0021-9886 • E-ISSN: 1468-5965
PublisherWiley (PUBLISHER • GB)
DOI10.1111/jcms.12287
OpenAlexW3122994838
LanguageEN
Citations received5
References cited14

A mechanism to restructure the debt of an insolvent euro country is a missing element in the emerging institutional architecture of the euro area. The introduction of an insolvency procedure for sovereigns faces a dilemma: in the foreseeable future, its introduction would risk pushing Europe back into acute crisis; but the indefinite postponement of reform would impair the credibility of a future regime change. Against this background, this article reviews arguments and existing blueprints for sovereign insolvency procedures in the euro area and develops a Viable Insolvency Procedure for Sovereigns. This procedure avoids any sudden measures which could destabilize the present fragile situation but carefully designs an irreversible transition toward the new regime. The proposal comprises two pillars: an insolvency procedure for the long run and a credible bridge toward that system

Bankruptcy · Blueprint · Business · Credibility · Creditor · Debt · Debt restructuring · Debtor · Dilemma · Economics · Insolvency · Operations management · Political science · Postponement · Restructuring · Sovereign debt · Sovereign default · Sovereignty · Banking stability, regulation, efficiency · Corporate Insolvency and Governance · Finance · Global Financial Crisis and Policies · Law

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