Since the failure of the International Monetary Fund’s Sovereign Debt Restructuring Mechanism (SDRM) in 2003, the international discussion on sovereign crisis workouts and debt restructuring has been at an impasse between proponents of statutory frameworks, such as the SDRM, and those favouring decentralised, ad hoc, market-based approaches.

Beyond some refinements to Collective Action Clauses (CACs) in bond contracts and their increased ubiquity, little progress has been made to improve the ability to resolve sovereign debt problems quickly, effectively and efficiently.

Given the global economic turmoil of the last few years and the prospects of additional disruptions, it is time to look afresh at ways in which the current global non-system for sovereign crisis management and debt restructuring can be improved.