logo-euiFlorence School of Banking & Finance

DEBTCON4

Conference Topics

 

1. Debt sustainability and sovereign vulnerabilities

Standard debt sustainability analysis relies on relatively rough techniques for combining empirical regularities, economic insights and political economy assessments. Several factors have revealed the need to reassess the prevailing approaches to debt sustainability analysis: the role of crisis resolution institutions in redefining the value of debt; debt market developments, especially in emerging countries; a new, possibly persistent but not necessarily permanent negative risk-free rate context; disappointing growth prospects; heightened fiscal risks arising from climate-related shocks; a globally changing political landscape; as well as a new analysis on the value of sovereign debt.


2. Market volatility and emerging markets’ sovereign debt

In recent times several emerging economies have improved their domestic monetary, fiscal and financial policy frameworks substantially, to the point where they often favourably compare to those of certain advanced economies. At the same time, financial account liberalization has increased volatility and therefore the vulnerability of some emerging economies. This calls for a better understanding of the determinants of sudden stops and for a reassessment of the existing policy frameworks. Have market participants and policymakers drawn the right conclusions from these developments?


3. The expanding role of new creditors’ overseas lending in global finance

Historically, low-income countries mostly borrowed from the international financial institutions and from bilateral creditors that belong to the Paris Club. In recent years, this group of low-income countries started relying more on commercial debt by issuing bonds or borrowing from international banks, and on bilateral lenders that are not part of the Paris Club. While a diversification of funding sources can be regarded as a welcome development, commercial lenders tend to charge higher interest rates and their lending flows tend to be more procyclical than official debt flows. The recent presence of non-traditional bilateral lenders generates issues of data availability and transparency, complicates creditor coordination and in some cases raises new concerns relating to debt sustainability.


4. Revising the European framework on sovereign debt and sovereign risk

After the euro area crisis and several years of reform standstill, the regulatory and supervisory framework underpinning Europe’s sovereign debt markets is again undergoing an intense review period. Following the introduction of single-limb collective action clauses, the European Stability Mechanism is to be given a stronger role in the assessment of sovereign solvency. Reform plans under discussion range from the (possibly radical) simplification of the Stability and Growth Pact to the introduction of (possibly risk-weighted and state-dependent) concentration charges of sovereign debt holdings. Reform plans also include the creation of a European safe asset which could take a myriad of operational forms. Policy-relevant contributions from different social science perspectives can greatly add to this analytical and policy debate.

 

Additional topics

The organising committee also welcomes original, academic or policy-relevant contributions on the topics below, including country case-studies and other related ones:
  • The international political economy and governance of sovereign debt
  • Changing architecture of sovereign debt management
  • Central banks, sovereign-banking doom loop and sovereign debt management
  • Official lending: bail-outs and bail-ins
  • Credibility, commitment and sovereign default
  • Debt and debt-forgiveness: human rights, civil society and political conflicts
  • Historical perspectives on the law and economics of sovereign bond markets
  • Sovereign debt contract design and pricing (collective action clauses, contingent sovereign debt)
  • When climate meets finance: use (and abuse) of green bonds