Background Note | HBS Case Collection | November 2006 (Revised May 2007)

International Capital Markets and Sovereign Debt: Crisis Avoidance and Resolution

by Laura Alfaro and Ingrid Vogel


Successive economic crises of the 1990s and early 2000s intensified focus on reform of the "international financial architecture." Because many of these crises involved defaults on sovereign bonds, an important component of the discussion revolved around the composition of international capital flows and sovereign debt restructuring. With the official sector, private creditors, and sovereign debtors focused on different issues, proposals surrounding the topic varied widely. Describes some of the proposals and summarizes scholarship on their advantages and disadvantages.

Keywords: Capital; Markets; Sovereign Finance; Conflict and Resolution; Financial Crisis;


Alfaro, Laura, and Ingrid Vogel. "International Capital Markets and Sovereign Debt: Crisis Avoidance and Resolution." Harvard Business School Background Note 707-018, November 2006. (Revised May 2007.)