The so-called bankruptcy means that when all the assets of the debtor are insufficient to pay off the due debts, the creditor will use all the assets of the debtor to pay the debts equally, thereby freeing the debtor from other debts that cannot be paid off. and be declared bankrupt and dissolved by the court. Due to the sluggish global economy, the debt problems of developing countries are becoming increasingly serious, and the number of countries that cannot repay their debts on time is increasing. Standard & Poor's, a world-famous credit rating company, issued a report stating that six countries in the world were unable to repay their due debts on time in the first three quarters of this year and were in a state of "bankruptcy", thus increasing the total number of countries in the world that are unable to repay their debts. Reached 28. The six newly added countries are Argentina, Gabon, Indonesia, Madagascar, Moldova and Nauru, with a total government debt of US$133 billion, almost double the US$74 billion in the same period last year. The report on sovereign debt default rates was released ahead of the annual meetings of the World Bank and the International Monetary Fund. On September 28, 2002, the two institutions held a meeting in Washington. One of the important topics was reforming the debt repayment mechanism.

Bankruptcy, like a nightmare, follows companies closely. Those who are insolvent will eventually be reborn within the framework of the "Bankruptcy Law" or auctioned or reorganized assets, while the old firms Like a piece of rag swaying in the wind, it quickly disappeared without a trace in people's memory. However, there are also some companies that are able to reverse their fortunes when they are on the verge of despair and continue to exist in the world at the cost of nationalization. Many of them are involved in the ongoing U.S. subprime mortgage crisis and the resulting global financial crisis. Financial institutions were nationalized out of necessity to maintain market confidence and stabilize the situation. The country has become the only last resort in the face of this unprecedented financial disaster in decades. If a bank goes bankrupt, you can choose to nationalize it. If the country goes bankrupt, who should own it?

The reason why the national debt crisis is complicated is that it does not have corresponding legal procedures. The difference between the country and the company is that the country cannot seek protection from the bankruptcy court. In this way, domestic bankruptcy laws such as fair Provisions such as judges, protection from lawsuits and the ability to force non-bankruptcy reorganization in the event of creditor objections are all gone in the event a state borrower goes bankrupt. The dilemma faced by system reformers is to plug the loopholes in the international financial system without scaring away all investors in emerging markets. There was a new case in the 2008 global financial crisis: Iceland was in danger of "national bankruptcy"! As a "mini" country with a population of only 320,000, the financial industry accounts for far more than other industries in the national economy. The country's financial industry has suffered heavy losses in the global credit crisis. Today, its financial industry's external debt has exceeded US$138.3 billion. , while Iceland’s GDP is only US$19.37 billion! If a company is in such trouble, the only way out is bankruptcy. So, will Iceland, which is theoretically on the verge of "national bankruptcy", go bankrupt?

The answer is definitely not. There are many reasons, the most important of which is that the most significant feature that distinguishes a country from an enterprise is that "national sovereignty is sacrosanct." After the end of the imperial colonial era, this principle has increasingly become international political consciousness and has become the principle of exchanges between countries with great disparities in wealth and poverty. Therefore, for those poor countries, although they are burdened with foreign debt and can theoretically be "bankrupt" hundreds of times, they have not been auctioned off. These poor countries have not disappeared from the international political map and become "new" for other bonded countries. colony". On the other hand, if there is a "market space" for "national bankruptcy" in the world, then the United States can use economic means to bankrupt one by one without any blood, just by relying on the power of the wealthy financial tycoons on Wall Street. Small countries are in the pocket, so the world will still be dominated by "power politics". Obviously, making "national bankruptcy" possible means allowing the hegemonic politics of the weak and the strong, ultimately destroying the fragile international balance between nation-states based on history, culture, ethnicity, religion and other origins.

In the 1980s, people engaged in protracted negotiations with banks to resolve the debt crisis. In the 1990s, the rise of bonds in emerging countries further complicated the solution to the problem. Organizing different investors with various bonds under different jurisdictions can be a nightmare, and the biggest problem is how to promote coordinated action by creditors. According to the principles of game theory, the joint actions of creditors will optimize the overall welfare level of all creditors and the debtor country. From an individual perspective, full payment of the debt will maximize individual welfare. In this way, creditors pursue individual welfare. Instead of maximizing individual welfare, maximizing actions will reduce both overall and individual welfare levels. This is the so-called "last man syndrome".

The bond system governed by New York law always cultivates creditors who pursue individual welfare maximization alone. Therefore, to improve the national default resolution mechanism, we must find ways to integrate these "selfish" creditors into collective actions. Among them, the ideal solution would even combine different assets and different legal systems to provide a legal platform for the country to issue new debt.

Debt restructuring after creditors are organized is a good way to solve the debt crisis. Russia, Ukraine and Ecuador have all recently conducted similar debt restructurings. Of course, this method needs to be improved.

So is there any way to prevent those "selfish" creditors from sabotaging the debt restructuring process, and what method should be used to organize creditors to act together? There are different opinions on this point, but the basic views can be divided into two major groups. One group is represented by the International Monetary Fund (IMF), which advocates legal reforms to provide for a mechanism for joint actions of creditors; the other group It is the "contract voluntary group" represented by the U.S. Department of the Treasury, which provides a resolution mechanism for the debt crisis by adding a clause in the bond issuance contract that "most creditors can carry out debt restructuring."