Challenges Ahead: Sovereign Debt

Sovereign debt ratios in advanced and emerging economies have grown to near record highs. In low-income countries, debt levels have been gradually building since the debt relief initiative of the early 2000s; furthermore, the debt burdens may be higher than the official estimates reveal, as these data do not fully capture debts to China. In the event of debt servicing difficulties, a more fragmented creditor base may complicate and delay the restructuring process. This paper describes the sovereign debt landscape today and considers potential problems that might lie ahead for both creditor and debtor countries alike. Possibilities of how the global financial architecture might need to adapt to the changing global landscape are discussed

Conducting Monetary and Credit Policy in Countries of the Former Soviet Union

This paper surveys some of the principal monetary policy issues facing countries of the former U.S.S.R. The emphasis is on the immediate problem of imposing financial discipline in these economies, to bring down inflation quickly and decisively. Possible options for the essential nominal anchor are considered, together with the problems of selecting appropriate targets and instruments for monetary policy needed to make that anchor effective. It is argued that, if the stabilization effort is to be sustained, discipline must be imposed at the micro- as well as the macro-level, and the paper suggests a second-best approach to the allocation of credit in the absence of well-functioning credit markets.

Exit Strategies

In a world of increasing capital mobility and broadening and more diversified trade, many (but not all) developing and transition economies are likely to find it desirable to move from relatively fixed exchange rate regimes to regimes of greater exchange rate flexibility. This paper suggests why, and considers strategies that countries may consider for such a move. It reinforces this discussion with a review of experience from teh past two decades with alternative exchange rate regimes. The paper also identifies policies that can facilitate the transition to greater exchange rate flexibility for countries that wish to pursue this option.