NEW YORK A recent decision by a United States appeals court threatens to upend global sovereign debt markets.

Sovereign Debt at Square One

The Root of All Sovereign Debt Crises

Sovereign debt restructuring

Sovereign debt no longer looks stable.

The sovereign debt and banking crises have become even more closely interlinked as banks bought greater amounts of their home countries sovereign debt.

The sovereign debt crisis is well known.

Sovereign debt for sustained development

Need for systemic coherence in managing sovereign debt

Until recently, the bond markets treated all euro sovereign debts as virtually equal, not raising interest rates on high debt countries until the possibility of default became clear.

And the evidence confirms that the euro crisis is not really about sovereign debt, but about foreign debt.

A mechanism for dealing in an orderly way with sovereign bankruptcy would be a major contribution to global governance, and to solving a longstanding problem of sovereign debt markets.

A New Approach to Eurozone Sovereign Debt

Sovereign debt restructurings with private creditors

Greek sovereign debt has been downgraded to below that of Egypt.

See IMF Reviewing the process for sovereign debt restructuring within the existing legal framework, Policy Development and Review, International Capital Markets, and Legal Departments, 1 August 2003.

The link between sovereign debt and bank debt has to be broken once and for all.

In Europe, risks spreads are rising on Italian and Spanish sovereign debt.

And it probably would require that the EU be able to issue sovereign debt.

Likewise, Europe is on life support, thanks to European Central Bank President Mario Draghi s astute maneuvering and promises of unlimited intervention in sovereign debt markets.

The economists Carmen Reinhart and Kenneth Rogoff have studied centuries of sovereign debt crises, and remind us that today s developed world has a forgotten history of sovereign default.

The risk premia on the sovereign debt of Greece, Ireland, and others have not diminished.

But, for the most part, the sovereign default process is slow motion Kabuki theater.

Sovereign interest rate spreads have been well behaved, the euro has strengthened, and equity markets have risen robustly.

Such opposition seems counter intuitive, given that the ECB s mere announcement of the OMT program calmed sovereign debt markets and reduced borrowing costs in peripheral countries.

Policy asymmetry is greatest for the countries most acutely affected by the sovereign debt crisis.

Currently, they are wrestling with widening sovereign debt problems and high unemployment.

Portugal might follow Greece in a sovereign default and in leaving the eurozone.

Interest rate spreads on Italian sovereign debt have widened, but not sharply.

The healing process is also evident in Europe, though, unfortunately, it is effectively limited only to sovereign bond markets.

Sovereign debt was eventually restructured through the creation of Brady bonds.

Much is being made of high levels of sovereign debt on both sides of the Atlantic, and in Japan.

The convergence of sovereign debt yields implied and required by the establishment of the common currency need not return.

The first relies on intervention by the central bank in the event of a threat to the sovereign debt market.

Some sort of Brady bond to reduce and extend excessive sovereign debt will be necessary.

a An option was included to convert US 30 year bond into a US 12 year bond with debt reduction.

The IMF sovereign debt restructuring mechanism (SDRM) proposal failed to gain support.

A sovereign debt restructuring mechanism, collective action clauses in sovereign bond contracts and a code of conduct for private creditors and sovereign debtors have all been proposed.

Until this summer, the sovereign debt crisis was confined to three small countries Greece, Ireland and Portugal.

So governments bailed out banks and economies, producing a sovereign debt crisis.

Indeed, restructuring undermines the foundation of the entire financial system the safe asset role of sovereign debt.

The country s sovereign rating is AA , not AAA, as it was 16 years ago.

The drama of the European sovereign debt crisis with Greece in its center is coming to a head, as politicians desperately seek options to disentangle the European Union from mounting debt.

Weak labor markets, low inflation, and debt overhang suggest that a fundamental re ordering of priorities is in order.

The European Commission s claim that this slowdown reflects high sovereign default risk, rather than fiscal consolidation, is belied by the UK, where the sovereign risk is deemed by markets to be virtually nonexistent.