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Sovereign debt and its restructuring framework in the eurozone

Date and time: 28 May 2013 13:45

Since the main burden of public debt reduction has fallen on fiscal austerity, public debt ratios in the eurozone remain high. Private debt burdens have also remained high since deleveraging has been slow. To regain growth momentum, public and private debt will need to be lowered. History suggests--and the current experience confirms--that predictable and orderly debt restructuring help the resumption of growth as the debt overhang and associated uncertainty are lowered. Looking ahead, sovereign debt should be regarded as equity (a residual claim on the sovereign), operationalised by mechanisms for automatic maturity extensions upon breaching contractually-specified thresholds.

Speaker

Ashoka Mody, Visiting Fellow at Bruegel and Charles and Marie Robertson Visiting Professor in International Economic Policy at the Woodrow Wilson School of Public and International Affairs, Princeton University

Discussant: Maarten Verwey, Deputy Director General, European Commission, DG ECFIN

Maarten Verwey has been Deputy Director-General for Economic and Financial Affairs (ECFIN) in the European Commission since September 2011, responsible for finance and international relations.

Mr. Verwey started his career at the Dutch Ministry of Finance in 1994. In 1999 he moved to Manila where he worked for three years for the Asian Development Bank. On his return to the Dutch Ministry of Finance in 2002, he became head of the export credit insurance division and two years later he assumed the position of deputy director of the economic and financial strategy department. He was nominated Director of Foreign Financial Relations in September 2007.

Maarten Verwey has been closely involved in the coordinated European response to the financial crisis. As chairman of the euro task force on coordinated action (from March 2010 to June 2011), he played a key role in first establishing the pooled bilateral loan facility for Greece, subsequently the European Financial Stability Facility (EFSF) and lastly the European Stability Mechanism. Since June 2012 he has been the EU mission chief for Cyprus financial assistance programme.

Mr. Verwey has a master’s degree in economics from the University of Groningen and a master’s in development finance from the University of London.

Chair: Guntram Wolff, Acting Director, Bruegel