Bruegel: Europe needs a framework for debt crises
28 April 2010
Bruegel director Jean Pisani-Ferry and Senior Fellow André Sapir argue that a European debt restructuring mechanism - on the lines of a sovereign debt restructuring mechanism, a suggestion that came up in the context of the Argentinean crisis - could be a realistic option.
Though the words debt restructuring repeatedly come up during discussions on the Greek crisis, the priority remains to implement the EU-IMF stabilisation package that can foster domestic efforts in Greece. However, Bruegel director Jean Pisani-Ferry and Senior Fellow André Sapir warn that the European Union needs to stay ahead of the curve and prepare a debt resolution mechanism in the event that a eurozone member has to tackle unsustainable debt. The authors argue that a European debt restructuring mechanism - on the lines of a sovereign debt restructuring mechanism, a suggestion that came up in the context of the Argentinean crisis - could be a realistic option. Questions about institutional coordination in activating an EDRM could pose a challenge.
© Bruegel
