A new approach has been developed to encourage sustainable private capital flows to emerging markets and strengthen the capacity of the system to avoid crises and cope more effectively with those that arise. Agreement has been reached on Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets.
Agreement on the Principles followed over two years of intense dialogue to find an approach which both sovereign issuers and their creditors could support. This dialogue was sparked by earlier proposals from the IMF and others, in particular by a speech by Jean-Claude Trichet, then Governor of the Banque de France, in the fall of 2002 suggesting the potential of a voluntary Code of Conduct.
The Principles recognize the important role that private capital plays, while respecting the essential roles of the IMF, the multilateral development banks and regulators of banks. They open the door for an era of greater direct cooperation between sovereign issuers in emerging markets and their investors and creditors.
The Principles are a set of voluntary market-based guidelines for cooperative action in which borrowers and creditors alike recognize their mutual interest in pursuing dialogue and cooperative actions. The Principles:
The Principles focus on four key areas: