Countries to seek bankruptcy protection

Adapted extract from an article by Tim Carrington entitled 'World bankruptcy procedure is urged' in The Wall Street Journal (March 7th '94) monitored for the Institute by Roger Knights.

Chairman Jim Leach of the House Banking Committee in Washington called for a new 'international bankruptcy regime' to deal with countries threatened with insolvency, such as Mexico.

The Iowa Republican noted that most Americans do not want the US Treasury to become a global banker of last resort any more than they want US troops to become a world police force. Such a role could be avoided, he said, if there were procedures for a country to enter a period of bankruptcy protection, in which 'an orderly reduction of liabilities could be negotiated.'

Republican Leach said he figured the International Monetary Fund would establish the legal structure for his proposed insolvency process.

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