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The CEPII Newsletter       
April 2019        

The French edition is slightly different as it also includes material available in French only  

Europe Monnaie & Finance Trade & Globalization Migrations Economic Policy Emerging Economies Competitivness & Growth Environment & Natural Ressources

The design of a sovereign debt restructuring mechanism for the euro area: choices and trade-offs

This paper critically assesses several dimensions of a sovereign debt restructuring mechanism (SDRM) for the euro area. The novelty of our analysis is that we abstain from recommending one ideal model for a restructuring mechanism. Instead, we apply a menu-type approach. For five key institutional SDRM dimensions, we discuss the underlying fundamental trade-offs and discuss the pros and cons of different design choices. Specifically, we investigate the following SDRM dimensions: (i) the institutional assignments of responsibilities, (ii) the condition or decision rule that triggers a debt restructuring, (iii) the design and size of debt restructuring, (iv) the role and details of collective action clauses (CACs), and (v) the safeguards for financial stability in support for a SDRM. We conclude that there is no such thing as the single optimal SDRM. Design decisions require judgements on the underlying trade-offs and related assumptions on relative costs. Also, the search for an appropriate euro area SDRM design can benefit from complementarities. Ambition in one dimension can offer more degrees of freedom in another dimension. Our analysis implies that there is no convincing reason to further taboo the search for a euro area SDRM, as there are ways to combine the opportunities of a credible SDRM with financial stability.
Christophe Destais, Frederik Eidam & Friedrich Heinemann


The Exorbitant Privilege of High Tax Countries

Excess returns on foreign assets owe largely to yield differential within the FDI asset class and are correlated to the corporate tax rate for a large sample of countries, consistently with tax motivated profit shifting by multinational corporations.
Vincent Vicard



The "new silk roads": an evaluation essay

(1/4): A Chinese vision of globalization

For more than thirty years, China has recorded exceptional trade surpluses and accumulated extraordinary financial reserves, which are almost twice those of its immediate follower Japan. These surpluses are an inconvenience to its most important partners, such as the United States and the European Union.

(2/4): The Belt, Corridors and roads

Initially Belt and Road Initiative (BRI) focussed on transport infrastructure and pipelines on the one hand and Europe-Asia connectivity on the other hand. It aims at building an Eurasian Belt as well as several corridors leading to maritime roads.

Michel Fouquin, Jean-Raphaël Chaponnière

  • Economists
  • Economist
    Deadline for application :
    April 10, 2019
  • ISSN: 1255-7072
    Editorial Director : Sébastien Jean
    Managing Editor : Dominique Pianelli