Introduction: The Players and the Game of Sovereign Debt‪.‬

In policy discussions about government debt, especially that of developing countries and particularly in cases when there is a crisis to overcome after a government defaults on its debt, commentators often talk about legal obligations, political necessity, and economic consequences. Implicitly or explicitly, commentators refer to what the "proper," "fair," or "just" actions would be. Typically, what is claimed as fair from the perspective of one group of interests (for example, the holders of defaulted government bonds) is regarded as unfair by another group (for example, the people whose taxes would be raised to pay the bondholders), and vice versa. Ultimately, a compromise is almost always reached between a sovereign debtor in crisis and its creditors. In practice, it is a compromise voluntarily entered into by the parties, under rules of negotiation accepted by all sides, including the understanding that the parties are unequal in negotiating strength. But does the parties' voluntary agreement mean the compromise represents a fair sharing of the burden among the different players? In fact, sometimes the result is fair and sometimes it is not. That is not a very satisfying conclusion to reach about the predominant method for organizing workouts from debt crises. Other approaches to resolving sovereign debt crises have been conceived, but none has been found generally acceptable. All the reforms introduced thus far in the renegotiation of sovereign debt have aimed to clarify the rules or facilitate reaching a conclusion under them. It is "the only game in town" because all others are deemed inferior by enough of the players to block a change of the game. The dominance of this method may itself be unfair, and if so, how does the world get to an alternative that is fair?