Publication

This paper describes how the Institute of International Finance, a bankers group, has promoted its "Principles for Stable Capital Flows and Fair Debt Restructuring" as a code of conduct for debtor governments and their private creditors to avoid sovereign defaults. The author argues that although drafted with Brazil, Korea, Mexico and Turkey this purely voluntary code is excessively creditor friendly. The paper suggests that instead a more balanced code should be developed and be coupled with an international disciplining mechanism that pushes creditors and debtor to a negotiated outcome under the code.