European Banking Regulations and Third-World Debt: The Technical, Political and Institutional Issues

Abstract

For some time, debtor governments concerned with the need for greater flexibility in debt management, including scope for debt reduction, have believed in the urgent need for creditor governments to review their banking and fiscal regulations to facilitate debt/debt-service reduction. Studies examining the debt problem, which stress the needs of the debtor economies, took a similar line. In a previous study,¹ it was concluded that:

Innovations in debt management required changes in banking and taxation regulations in some or all creditor countries that would smooth (over the years) or make less costly to creditor banks the partial writing down and writing off of debt, and/or some sort of interest relief. Existing regulations have become too great an obstacle to innovative solutions to the debt crisis; it has often been almost forgotten that regulations are only man-made and can be modified if they do not suit current needs!