CAPITAL MARKETS AND EMERGING MARKETS POLICY

Principles for Stable Capital Flows and Fair Debt Restructuring

IIF Participated in the Discussions on the ICMA Model Aggregated CACs for Sovereign Bonds

September 5, 2014 — Senior IIF staff have participated over the past two years in the broad-based discussions on the formulation of a model aggregated Collective Action Clauses for sovereign bonds by the International Capital Market Association (ICMA), whose members include over 400 major banks, asset managers and investors, and sovereign debt issuers. Other participants in these discussions included IMF and U.S. Treasury officials, other officials from emerging markets, market participants and practitioners, and academics. The model aggregated CACs are intended to complement the existing CACs for restructuring individual series of sovereign bonds and thus strengthen the effectiveness of the prevailing contractual approach to sovereign debt restructuring in requiring high creditor participation in debt restructurings whilst reducing materially the potential incidence of holdout creditors disrupting a restructuring. The discussions culminated in an agreed framework, released publicly on Friday, August 29, 2014, which can be used by sovereign debtors in future new bond issuance.

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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.

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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.

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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.

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Joint Committee Welcomes the Voluntary Nature of Greek Debt Restructuring, Underscores Importance of Cooperative Approach Based on the Principles

October 24, 2012 — Against the backdrop of the sovereign debt crisis in the Euro Area, and particularly following the voluntary debt exchange for Greece, it is vital for the international financial community to work to strengthen the framework for crisis prevention and resolution. Towards that end, a report just issued by the public-private sector Joint Committee on Strengthening the Framework for Sovereign Debt Crisis Prevention and Resolution strongly recommends that sovereign issuers take a voluntary approach to pursuing good-faith negotiations with creditors to achieve agreement on fair debt restructuring, should it prove to be unavoidable, in accordance with the well-established Principles for Stable Capital Flows and Fair Debt Restructuring.

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Meeting of the Group of Trustees of the Principles

October 14, 2012 — Statement by the Co-Chairmen on behalf of the Group of Trustees

  • Mr. Agustín Guillermo Carstens, Governor, Banco de México
  • Mr. Zhou Xiaochuan, Governor, People’s Bank of China
  • Mr. Toshihiko Fukui, President, the Canon Institute for Global Studies and Former Governor of the Bank of Japan
  • Mr. Christian Noyer, Governor, Banque de France

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

April 22, 2012 — Senior officials from G-20 countries, senior IMF management, as well as leaders from the private creditor and investor community participated in a roundtable discussion on International Capital Markets and Emerging Markets in Washington, DC. Leveraging on its status as a primary forum for dialogue among senior leaders in global finance and policy makers, the program and themes of the Roundtable this year were organized in close coordination with the Mexican G-20 Presidency.

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Meeting of the Group of Trustees of the Principles

September 25, 2011 — Statement by the Co-Chairmen on behalf of the Group of Trustees

  • Mr.Jean-ClaudeTrichet, President, European Central Bank
  • Mr. Zhou Xiaochuan, Governor, People’s Bank of China
  • Mr. Agustín Guillermo Carstens, Governor, Banco de México
  • Mr. Toshihiko Fukui, President, the Canon Institute for Global Studies and Former Governor of the Bank of Japan

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China’s Governor Zhou Xiaochuan and Mexico’s Governor Agustín Carstens Become New Co-Chairmen of the Group of Trustees of the Principles

February 17, 2011 — The Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring announced today that Governor Zhou Xiaochuan of the People’s Bank of China and Governor Agustín Carstens of Banco de México will both be joining President Jean-Claude Trichet of the European Central Bank and Mr. Toshihiko Fukui, former Governor of the Bank of Japan, as Co-Chairmen of the Trustees.

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Meeting of the Group of Trustees of the Principles

October 11, 2010 —

Statement by the Co-Chairmen on behalf of the Group of Trustees.

Mr. Jean-Claude Trichet, President, European Central Bank

Mr. Henrique de Campos Meirelles, Governor, Central Bank of Brazil

Mr. Toshihiko Fukui, President of the Canon Institute for Global Studies and Former Governor of the Bank of Japan

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Group of Trustees of the Principles for Emerging Markets Meet in Istanbul, Turkey

October 4, 2009 —

Statement by the Co-Chairmen on behalf of the Group of Trustees.

Mr. Jean-Claude Trichet, President, European Central Bank
Mr. Henrique de Campos Meirelles, Governor, Central Bank of Brazil
Mr. Toshihiko Fukui, President of the Canon Institute for Global Studies and Former Governor of the Bank of Japan

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Group of Trustees of the Principles for Emerging Markets Meet in Washington

October 12, 2008 — Members of the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets met today to review the progress being made on the implementation of "The Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets" within the framework of the international financial architecture.

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

April 14, 2008 — Senior officials from 25 emerging market countries and the G7, senior IMF management, as well as leaders from the private creditor and investor community participated in a roundtable discussion on International Capital Markets and Emerging Markets on April 14, 2008, in Washington, DC.

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Group of Trustees of the Principles for Emerging Markets Meet in Washington

October 22, 2007 — Members of the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets met today to review the progress being made on the implementation of the Principles within the framework of the international financial architecture.

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Group of Trustees of the Principles for Emerging Markets Holds Inaugural Meeting

September 18, 2006 — Members of the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets held their inaugural meeting today in Singapore. The discussions focused on a review of the Principles and their implementation within the framework of the international financial architecture.

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Trichet, Meirelles and Gyohten to Lead New Group of Trustees for Emerging Markets Finance Initiative

March 30, 2006 — A Group of Trustees has been established to play leadership roles in the development of the emerging markets financial system, co-chaired by Mr. Jean-Claude Trichet, President of the European Central Bank, Mr. Henrique de Campos Meirelles, Governor of the Central Bank of Brazil, and Mr. Toyoo Gyohten, President of the Institute for International Monetary Affairs in Tokyo, a former Japanese Vice Minister of Finance and a former Chairman of the Bank of Tokyo.

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Key Principles Agreed To Strengthen Emerging Markets Finance

November 22, 2004 — Major sovereign issuers of international bonds and global leaders of private finance announced agreement here today on a set of "Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets."

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