The rules of the game: negotiation, enforcement, contestation

The “cooperative” or “burden-sharing” approach that was adopted in the fall of 1982 established a precedent for all ulterior debt restructurings until the early 1990s. This chapter analyses this unique, extra-territorial set of rules which asked that sovereign debt be uploaded on a restructuring platform that was operated by the IMF. The discussion unfolds in explicit or implicit comparison with rules in force between the 1820s and 1930s, which were rooted in (typically British) domestic market institutions, and with the post-1990 quasi-regime, where national courts (typically US) exercise a large de facto influence. Throughout the decade, however, this approach asked that banks be arm-twisted by national regulators, primarily the Central Banks. This dimension, which has remained essentially ignored in the literature, is documented - as far as oral testimonies and archives allow. Also documented are the deep tensions that resulted within the Western policy elites. Lastly, the chapter discusses the policy of forbearance adopted by bank regulators and the absence of any mandatory call to banks to increase their equity capital base, in a sharp contrast with the policy adopted in 2008.