Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies

by Nouriel Roubini and Brad Setser
August 2004
Book Description

Roughly once a year, the managing director of the International Monetary Fund, the US treasury secretary and in some cases the finance ministers of other G-7 countries will get a call from the finance minister of a large emerging market economy. The emerging market finance minister will indicate that the country is rapidly running out of foreign reserves, that it has lost access to international capital markets and, perhaps, that is has lost the confidence of its own citizens. Without a rescue loan, it will be forced to devalue its currency and default either on its government debt or on loans to the country's banks that the government has guaranteed. This book looks at these situations and the options available to alleviate the problem. It argues for a policy that recognizes that every crisis is different and that different cases need to be handled within a framework that provides consistency and predictability to borrowing countries as well as those who invest in their debt.

Chapters are provided for preview only.



1. Introduction [pdf]

2. New Nature of Emerging-Market Crises [pdf]

3. Analytical Literature on Crisis Resolution [pdf]

4. Experience with Bailouts and Bail-ins [pdf]

5. Official Policy Toward Crisis Resolution [pdf]

6. Responding to Liquidity Shortages [pdf]

7. Seniority of Sovereign Debts [pdf]

8. Legal Reform [pdf]

9. Recommendations for Reform [pdf]

Appendix [pdf]

References [pdf]



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Book Data

August 2004
ISBN paper 978-0-88132-371-9
348 pp.

Commentaries on This Book

"Bailouts or Bail-ins? is masterful. It is by far the best book written in recent years on the vexing subject of how the international community should address international financial crises of emerging market economies."

Jeffrey D. Sachs, Director of the Earth Institute, Columbia University

"Bailouts or Bail-ins? will prove to be a useful tool for those confronting these crises, and a clear, accessible overview for those studying global markets."

Lawrence H. Summers, President, Harvard University and Former U.S. Treasury Secretary

"This is the most intelligent and comprehensive analysis yet of how the international community should respond to financial crises. . . . It will be the definitive work on this subject for some time to come."

Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science, University of California, Berkeley

"A fluid and deeply informed synthesis of the recent debate on how to improve sovereign debt workouts. Roubini and Setser's book will likely be a standard reference for many years to come."

Kenneth Rogoff, Harvard University

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