It is almost common sense that the current regime for negotiating sovereign debt restructurings requires improvement. ‘Too little, too late’ has become the slogan of many stakeholders in politics, the financial industry and academia who believe that the current state of affairs is unsatisfactory. ‘Too little’ means that sovereign debt restructurings in the past have not always stabilized the financial situation of a country. Often, they have been tailored in accordance with debt sustainability analyses based on overly optimistic growth projections. ‘Too late’ refers to frequent debtor and creditor procrastination in recognizing that a restructuring is needed. Which solutions impose themselves? An international treaty most probably is not, as desirable as it might be. The current geopolitical situation hardly seems to call for measures involving potential sovereignty costs for states. New contractual clauses allowing for restructurings by a majority of creditors have been the means of choice for the past decade or so. Nevertheless, each variation of these contractual clauses has shortcomings. Holdout creditors usually find ways to get around these clauses and to acquire a blocking minority. If the situation remains as it is, we are stuck with a more or less dysfunctional regime that creates uncertainty by leaving creditors and debtor states. Meanwhile, the people of debtor states have paid a high price for multiple rounds of suboptimal restructurings. In this situation, the UN General Assembly adopted a resolution last September that set out Basic Principles on Sovereign Debt Restructuring Processes […]