Explainer: Can a New York state law solve an emerging markets debt crisis?
A bill backed by debt justice campaigners and civil society groups advocating on behalf of economically distressed countries could alter past and future sovereign debt restructurings covered by New York state law – and Wall Street is watching.
Senate Bill S4747, the NY Taxpayer and International Debt Crises Protection Act, “relates to New York state’s support of international debt relief initiatives for certain developing countries.”
The bill includes limits to state investments into foreign entities and would include private creditors in “burden-sharing standards” in which they would take the same losses – or “haircuts” – that the United States government would as a sovereign creditor when a low-income country in distress qualifies for debt relief.
The limit of this definition is a point of contention between the advocates of the bill and its detractors.
By Rodrigo Campos and Jorgelina Do Rosario via Reuters