Making the Case for a Global Bankruptcy Court

By Will McKitterick

On November 10-11, the G-20 held its fifth summit in Seoul titled “The G-20’s Role in the Post-Crisis World” to devise a strategy for rescuing the global financial system. Present at the meeting were 20 representatives from the world’s largest economies who sat down to work out initiatives to generate economic cooperation and recovery. Absent from the summit were representatives from the rest of the world, including the billions of people living in abject poverty. As a result, one of the most important initiatives to rectify the financial crisis – an international bankruptcy court – was concurrently missing from the meeting’s agenda.

Heavily indebted countries were some of the hardest hit nations during the financial crisis. With their reserves depleted, they have been forced to divert funding from vital services, such as healthcare and education, to pay back loans to financial institutions, leaving their most vulnerable citizens without the social safety nets they rely on to survive. During these dire times, countries with unsustainable debt in desperate need of financial assistance have no recourse but to beg their creditors for debt relief, or to default and become international pariahs.