Capital Markets and Emerging Markets Policy

Cyprus: Dealing with Rising NPLsMember only content

After solid performance in the first year under Cyprus’ rescue program, strong political resistance has emerged against the implementation of the agreed strategy for dealing with the high NPLs. A compromise on a revised draft foreclosure law was reached with the Troika, entailing an appropriate balance of the rights of both borrowers and lenders. Enactment of the foreclosure law is a prior action for the completion of the fifth program review, but it is subject to heightened uncertainty. Adoption and effective implementation of the law is critical for the resumption of bank credit expansion and the restoration of output and employment growth.

Read Report


Argentina’s Sovereign Debt: Negotiation is the Way Forward

The U.S. Supreme Court announced on June 16 that it will not consider Argentina’s petition to review a decision by the Second Circuit Court of Appeals requiring full payment of holdout creditors at the same time debt service payments are made to the exchanged bond holders. Voting 7-1, the Supreme Court also upheld another Second Circuit Court decision allowing holdout creditors to seek discovery of Argentine assets globally. The Supreme Court decision has raised uncertainty and volatility in the markets for Argentine sovereign bonds and other securities. It is not clear what will happen if the stay of execution of the appeals court decision were to be lifted. In a televised address on June 16 commenting on the U.S. Supreme Court decision, the Argentine President indicated that Argentina is open to negotiation.

In line with the guidelines underlying the Principles for Stable Capital Flows and Fair Debt Restructuring—endorsed by the G20 in 2004—the Institute of International Finance considers that the constructive way forward, even at this late stage, is negotiation to reach an agreement between Argentina and its holdout creditors. If both sides are agreeable to such negotiations, they could ask the Court for a reasonable amount of time to do so.

Read more


Meeting of the Paris Club with Representatives of Non Paris Club Bilateral Creditors and Representatives of the Private Sector

June 25, 2014 — For the 14th consecutive year, the Paris Club and the Institute of International Finance jointly organized a meeting between Paris Club creditors, Paris Club ad hoc participants and private creditors, along with representatives from the International Monetary Fund and the World Bank.

Sovereign and private participants stressed the paramount importance of dialogue between sovereign debtors and their creditors and coordination among creditors as the cornerstone of an efficient system for sovereign debt crisis prevention and resolution.

Read Press Release


IIF Urges G20 to Complete Regulatory Agenda, Promote Infrastructure Investment and Encourage Policies to Strengthen Capital Flows to Emerging Markets

February 12, 2014 — IIF President and CEO Tim Adams wrote to The Honorable Joe Hockey MP, Treasurer of the Australian Treasury, ahead of the G20 meeting of finance ministers and central bank governors in Sydney. Adams highlighted three major policy areas that are critical for promoting stronger growth and making the economy more resilient against shocks: complete the global regulatory reform agenda; promoting investment in infrastructure; and encouraging policies that strengthen capital flows to emerging markets.

Read more


IIF Special Committee on Financial Crisis Prevention and Resolution

Views on the Way Forward for Strengthening the Framework for Sovereign Debt Restructuring

This note highlights the Special Committee’s views on the way forward for strengthening further the sovereign debt restructuring framework, including the Committee’s reactions to the International Capital Markets Association’s (ICMA) draft new guidelines for aggregation clauses and to the IMF staff’s key points and suggestions included in the April 2013 IMF Staff Report on possible changes to the IMF policy and legal framework for sovereign debt restructuring that could be considered. The Special Committee comprises 43 senior officials from major IIF-member financial institutions that represent the private creditor and investor community. This note summarizes the views of the Special Committee expressed in a number of forums. The note is intended to contribute constructively to the ongoing discussions on possible refinements to the existing contractual, market-based approach to sovereign debt restructuring.

Read Report


International Debt Negotiation: Experiences and Lessons Learned

November 7, 2013 — Speaking at a Bertelsmann Foundation–OAS Conference in Grenada, IIF Executive Managing Director Hung Tran discussed how to strengthen sovereign debt crisis prevention and resolution, as well as the importance of adhering to the current contractual, market-based framework for sovereign debt restructuring.

Read more


Meeting of the Paris Club with Representatives of Non Paris Club Bilateral Creditors and Representatives of the Private Sector

October 22, 2013 — The Paris Club and the Institute of International Finance jointly organized for the 13th consecutive year a meeting between Paris Club creditors, representatives of Paris Club associated members and of private creditors. IMF and World Bank representatives also attended the meeting. Official creditors and private sector representatives discussed several current global finance issues: the changing landscape of capital flows in low income countries and the potential associated challenges; the most recent restructuring activities of the Paris Club; a forward-looking vision of the group of creditors, including its pivotal role in the changing landscape of global finance; the existing framework for sovereign debt crisis prevention and resolution; and the key features of recent sovereign debt restructurings.

Read Press Release


2013 PCG Report on Implementation of the Principles

October 12, 2013 — The Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring held its 2013 Annual Meeting in Washington DC to review the progress made on the implementation of the Principles, as highlighted in the 2013 Implementation Report prepared by the Principles Consultative Group (PCG). Observers from the IMF, the Federal Reserve Bank of New York, the European Central Bank, the European Investment Bank as well as from the financial services industry were in attendance.

As noted in the press release, the Trustees noted with satisfaction that the voluntary, market-based, flexible guidelines for the behavior of sovereign debtors and private creditors underlying the Principles continue to serve as a very useful framework for both crisis prevention and resolution with a view to promoting and maintaining stable capital flows and supporting financial stability and sustainable growth.

Read more


Key Economic and Regulatory Issues for the G20 Regarding Global Output, Financial Stability, and Sovereign Debt Restructuring

August 29, 2013 — On the occasion of the G20 Leaders’ Summit meeting in St. Petersburg on September 5-6, Tim Adams, President and CEO of the IIF, has written to His Excellency President Vladimir Putin, President of the Russian Federation, to advocate the IIF’s views regarding the importance of consistent regulatory policy in a global economy; the need to sustain balanced global growth; and the benefits of market-based collaboration during sovereign debt restructuring.


Private Sector and Public Sector Leaders meet in Washington for a Roundtable on International Capital Markets and Emerging Markets

April 21, 2013 — Senior public officials from both mature and emerging market economies, leaders from the private finance sector, and representatives from international financial institutions participated in a Roundtable discussion on International Capital Markets and Emerging Markets in Washington DC. The Roundtable has become over the last few years a major annual event, and a key forum for the exchange of views among key decision makers in both the public and private sectors on global policy issues and sovereign debt market developments.

Read more


IIF Policy Letter: The Risk of Fragmentation in a Global Economy

April 16, 2013 — On the occasion of the upcoming IMF/World Bank Spring Meetings, Tim Adams, President and CEO of the IIF, has written to Tharman Shanmugaratnam, Chairman, International Monetary and Financial Committee, and Marek Belka, Chairman, Development Committee, to share the IIF’s concerns about the risk of fragmentation in a global economy.

Read more