As history has shown, the systemic impact of sovereign default on world finance is therefore not a recent story, and certainly does not begin with the Greek 2010-2013 debt crisis. As Greece or Ukraine today, many states have in the past failed to meet their financial commitments. Notably, however, sovereign insolvency today leads to debt restructuring negotiations, which shake financial markets and often lead to hard times, if not massive impoverishment, for the local population. Moreover, these debt-restructuring agreements, when concluded, may be further disturbed or challenged through individual lawsuits from holdout creditors, who are often investment funds that specialize in distressed State debts.
Struck by the current massive financial and political impact of state insolvency, a working group of lawyers, both academics and practitioners, has been formed under the International Law Centre of the University of Paris Ouest Nanterre La Défense (CEDIN). This working group seeks to identify appropriate international mechanisms for solving a State’s insolvency. Begun in 2013, the work of this research group has now led to the project creating an International Centre for the Financial Safeguard of States (ICeFSS).