Claessens_IPD_SovDebt_Working_Paper

Claessens_IPD_SovDebt_Working_Paper - Working Paper Series...

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Unformatted text preview: Working Paper Series Reasons for Limited Sovereign Risk Management and How to Improve It Stijn Claessens Task Force on Debt Restructuring and Sovereign Bankruptcy The opinions expressed in these papers represent those of the author(s) and not The Initiative for Policy Dialogue. These papers are unpublished. Do not cite them without explicit permission from the author(s). REASONS FOR LIMITED SOVEREIGN RISK MANAGEMENT AND HOW TO IMPROVE IT Stijn Claessens University of Amsterdam and International Monetary Fund December 2007 1. INTRODUCTION .......................................................................................................... 1 2. OBSTACLES TO BETTER RISK MANAGEMENT IN DEVELOPING COUNTRIES ...................................................................................................................... 2 2.1. Multiple and large risks .......................................................................................... 2 2.2. Limited access to financial sector tools for risk management ................................ 3 2.3. Constraints within developing countries ................................................................. 5 2.4. Constraints coming from international capital markets .......................................... 6 3. DETERMINANTS OF GOVERNMENT DEMAND FOR RISK MANAGEMENT ................................................................................................................ 9 3.1. Expectations from theory ........................................................................................ 9 3.2. Low priority for risk management in practice ...................................................... 12 4. HOW TO IMPROVE SOVEREIGN RISK MANAGEMENT ................................... 14 4.1. Governments ......................................................................................................... 14 4.2. Markets ................................................................................................................. 16 4.3. Official lenders and other international financial institutions ............................... 17 5. CONCLUSIONS .......................................................................................................... 22 REFERENCES ................................................................................................................. 23 Contact: SClaessens@imf.org . The original draft of this chapter was presented on October 14-15, 2004, at the joint Initiative for Policy Dialogue and UN Department of Economic and Social Affairs workshop at Columbia University, New York, and at the International Policy Workshop on Debt Sustainability, External Shock and Financing Instruments in Low Income Countries organized by InWEnt, the German Ministry of Economic Cooperation and Development, the German Development Institute, and the World Bank on November 22-23, 2004, Berlin, Germany. I would like to thank the two workshop participants for their comments. The opinions expressed do not necessarily represent those of the International Monetary Fund. 1...
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This note was uploaded on 08/06/2011 for the course ACCT 1850 taught by Professor Smith during the Summer '11 term at Ecole Polytechnique Fédérale de Lausanne.

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Claessens_IPD_SovDebt_Working_Paper - Working Paper Series...

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