Vinod K. Aggarwal
Sovereign Debt: Origins, Management, and Restructuring, 2003
The 1997–9 Asian debt crisis has raised our interest in studying the origin and resolution of debt crises in comparative perspective. It is particularly important for scholars and policy-makers to see how problems have been handled in other situations now that alternative schemes to reform international institutions, regulate financial intermediaries and improve debtor policies and the like are being considered.
This chapter discusses the origins of major debt crises since the 1820s and the ensuing debt-rescheduling processes between borrowers and creditors.1 In examining this history, I identify four different cycles of lending, default and rescheduling, namely the 1820s to the 1860s, the 1870s to the First World War, the 1920s to the 1960s, and the 1970s to the 1990s. The analysis in section 2.2 follows what I term an epochal division, and emphasizes the following characteristics of the creditor–debtor relationship: (1) the distribution of capabilities in the four different periods; (2) the different types of lender and debtor involved; and (3) the presence or absence of international regimes as a constraint on actors’ behaviour.