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Online seminar: Venezuela’s ‘Hunger’ Bonds

On the 25th of January 2018 the Florence School of Banking and Finance hosted an online seminar on the topic of debt restructuring, focused on the case study of Venezuela.

Entitled ‘Venezuela’s ‘Hunger’ Bonds’, the online seminar provided an analysis on the basis of an age-old question in international finance and law, dating back at least to the days of the Czar:  what happens when a country leadership chooses to favor the interests of foreign bondholders over those of its local population, using despotic means? Does the local population, after the leadership has been removed, have to continue paying these “odious” debts? These questions have been addressed  in the context of the Venezuelan debt crisis, where an anti-democratic leadership continues to favor the interests of foreign bondholders over a deprived local population.

Asked in real time whether countries should pay back debts of prior despotic regimes, most of the participants (62%) provided their opinion that they should not. In a subsequent polls, participants were asked which factor, in their opinion, had the biggest effect on the price of Hunger Bonds, to which 62% responded that it was the effect of public letters from the opposition to banks, and 31% that it was the effect of Ricardo Hausmann’s blog post, while only 7% pointed to the effect of public protests.

Two leading international experts on sovereign debt featured as speakers in the seminar: Mitu Gulati, Professor of Law at Duke Law School at Duke University, whose expertise include the historic evolution of concepts of sovereign immunity and the role that law can play as a symbol, and Jeromin Zettelmeyer, a Senior fellow at the Peterson Institute for International Economics, whose research and policy interests include Europe’s currency union, Greece’s debt problem, the social impact of macroeconomic adjustment and reform, and the causes and consequences of the global productivity slowdown.

Download the slides of the presentation