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... vier Bestellungen (nachfolgend "Contracts" bzw. "Verträge") über insgesamt 25'000 Tonnen S...
Despite revolving sovereign debt crises, effective reforms of the international financial architecture with a view to improving crisis prevention have never been successfully implemented. In our view, policy makers have unduly focussed on crisis symptoms instead of tackling the true cause of debt crises, namely, the market failure on international bond markets. We argue that only if the market price of newly issued bonds adequately reflects the associated increase in default-risk, and if enforceable seniority rules as in private bond contracts are introduced can there be a reduction of the incentives to enter excessively large and short-term bond contracts. On the basis of contract theory we propose an institutional framework which reduces the incentives to unsustainable sovereign debt ...
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