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OUP CORRECTED PROOF – FINAL, 01/10/19, SPi
Sovereign Debt
Sovereign Debt
A Guide for Economists and Practitioners
Edited by
S . A L I A B BA S , A L E X P I E N KOWSK I ,
AND KENNETH ROGOFF
1
1
Great Clarendon Street, Oxford, OX2 6DP,
United Kingdom
Oxford University Press is a department of the University of Oxford.
It furthers the University’s objective of excellence in research, scholarship,
and education by publishing worldwide. Oxford is a registered trade mark of
Oxford University Press in the UK and in certain other countries
© International Monetary Fund 2020
The moral rights of the authors have been asserted
First Edition published in 2020
Impression: 1
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system, or transmitted, in any form or by any means, without the
prior permission in writing of Oxford University Press, or as expressly permitted
by law, by licence or under terms agreed with the appropriate reprographics
rights organization. Enquiries concerning reproduction outside the scope of the
above should be sent to the Rights Department, Oxford University Press, at the
address above
You must not circulate this work in any other form
and you must impose this same condition on any acquirer
Published in the United States of America by Oxford University Press
198 Madison Avenue, New York, NY 10016, United States of America
British Library Cataloguing in Publication Data
Data available
Library of Congress Control Number: 2019945698
ISBN 978–0–19–885082–3
DOI: 10.1093/oso/9780198850823.003.0001
Printed and bound in Great Britain by
Clays Ltd, Elcograf S.p.A.
Links to third party websites are provided by Oxford in good faith and
for information only. Oxford disclaims any responsibility for the materials
contained in any third party website referenced in this work.
Nothing contained in this Work should be reported as
representing the views of the IMF, its Executive Board, member
governments, or any other entity mentioned herein.
The views in this Work belong solely to the Editors and Contributors.
Foreword
Since the 1980s Latin America Debt Crisis, the International Monetary Fund
has played a central role in preventing and resolving sovereign debt crises. We
have supported our members regain debt sustainability and market access
through liquidity support, and facilitated official and private sector coordin
ation in the provision of new money and debt relief. This is the Fund’s power
ful ‘catalytic role’ in helping countries in crisis.
The IMF has also led in sovereign debt research and innovation. The devel
opment of historical debt databases, the advances in debt sustainability ana
lytics, the evolution of the Fund’s lending framework (not to mention the
extensive research underlying it), and the promotion of collective-action
clauses, have all supported efforts to prevent, and more efficiently resolve,
sovereign debt crises.
The need for a clear understanding of the opportunities and risks associ
ated with sovereign debt has never been greater than today. Public debt has
ballooned since the global financial crisis and the creditor base has become
more fragmented and complex. Many countries are facing vulnerabilities, and
new crises will occur, as they have many times in the past. Each crisis reminds
us of some old problems, but it also highlights new challenges.
This book provides a stock-take of the perennial issues—what motivates
debt accumulation; how should debt be monitored, recorded and managed;
and what strategies are available to reduce debt, and where needed, restruc
ture it. It also seeks to identify new problems, for example, the issue of debt
transparency, where obligations are hidden or the terms are opaque; or the
growing number of official sector creditors that may make it more difficult to
coordinate timely debt relief when needed.
In many cases, there is currently no consensus on the appropriate policy
response. Indeed, sovereign debt is a complex field where economic and legal
thinking is evolving rapidly, with potentially profound effects on the lives of
many people.
This underscores the need for the IMF to be continuously learning and
innovating to remain at the frontier of the subject, notwithstanding our sub
stantial expertise accumulated through our involvement in four decades worth
of debt crises. Accordingly, this publication pulls together contributions by
vi Foreword
leading experts on sovereign debt across a range of disciplines—economics,

law, history and finance.
This guide is designed to provide a foundation for understanding sovereign
debt that will be useful to academics, practitioners, and policymakers alike.
I hope you find it as interesting and informative as I did.
Christine Lagarde
Managing Director, International Monetary Fund
July 2019
Contents
Editors Bios viii

List of Contributors x
Introduction1
1. Public Debt through the Ages 7
Barry Eichengreen, Asmaa El-Ganainy, Rui Pedro Esteves,
and Kris James Mitchener
2. Concepts, Definitions and Composition 56
Serkan Arslanalp, Wolfgang Bergthaler, Philip Stokoe,
and Alexander F. Tieman
3. The Motive to Borrow 102
Antonio Fatás, Atish R. Ghosh, Ugo Panizza,
and Andrea F. Presbitero
4. Debt Sustainability 151
Xavier Debrun, Jonathan D. Ostry, Tim Willems,
and Charles Wyplosz
5. Debt Management 192
Thordur Jonasson, Michael G. Papaioannou, and Mike Williams
6. Reducing Debt Short of Default 225
Tom Best, Oliver Bush, Luc Eyraud, and M. Belen Sbrancia
7. Sovereign Default 275
Julianne Ams, Reza Baqir, Anna Gelpern, and Christoph Trebesch
8. The Restructuring Process 328
Lee Buchheit, Guillaume Chabert, Chanda DeLong,
and Jeromin Zettelmeyer
9. Challenges Ahead 365
Hugh Bredenkamp, Ricardo Hausmann, Alex Pienkowski,
and Carmen Reinhart
Appendix405
S. Ali Abbas and Kenneth Rogoff
Index of Names423
General Index429
Editors Bios
S. Ali Abbas:
Ali Abbas is deputy chief of the Debt Policy division in the Strategy, Policy, and
Review department of the International Monetary Fund. He has led key reforms to
the Fund’s lending and crisis resolution frameworks; served as Fund liaison to the
Paris Club; and been closely involved in several exceptional access Fund-supported
programs, including Ireland 2010, Ukraine 2015, and Argentina 2018. He has pub
lished on fiscal policy, government financing, and sovereign debt crises, and helped
compile widely-used databases on the level, dynamics and composition of public debt.
Ali has a D-Phil in Economics from the University of Oxford (where he was a Rhodes
Scholar) and served as an Overseas Development Institute fellow in Tanzania.
Alex Pienkowski:
Alex Pienkowski is an economist in the European department of the International
Monetary Fund with a focus on sovereign debt, in particular the resolution architecture
for debt crises, the costs and benefits of state-contingent debt and the propagation of
shocks during crises. He has worked on a range of countries including Portugal,
Argentina, Ukraine and Mongolia. Prior to the IMF, Alex worked for the Bank of
England for five years. He specialised in international issues in both the financial
stability and monetary analysis departments of the Bank. Much of his time involved
working on the euro area sovereign debt crisis. Alex was also an Overseas Development
Institute fellow in Malawi between 2007–09.
Kenneth Rogoff:
Kenneth Rogoff is Thomas D. Cabot Professor at “http://www.harvard.edu/” Harvard
University. From 2001–2003, Rogoff served as Chief Economist at the “http://
www.imf.org/external/index.htm” International Monetary Fund. His widely-cited
2009 bookwith “http://www.carmenreinhart.com/” Carmen Reinhart, “http://www.
reinhartandrogoff.com/” This Time Is Different: Eight Centuries of Financial Folly,
shows the remarkable quantitative similarities across time and countries in the run-
up and the aftermath of severe financial crises. Rogoff is also known for his seminal
work on exchange rates and on central bank independence. Together with Maurice
Obstfeld, he is co-author of “https://mitpress.mit.edu/books/foundations-international-
macroeconomics” Foundations of International Macroeconomics, a treatise that has
also become a widely-used graduate text in the field worldwide. Rogoff ’s 2016 book
“http://press.princeton.edu/titles/10798.html” The Curse of Cash looks at the past,
present and future of currency from standardized coinage to crypto-currencies and
central bank digital currencies. The book argues that although much of modern mac
roeconomics abstracts from the nature of currency, it in fact lies at the heart of some
Editors Bios ix
of the most fundamental problems in monetary policy and public finance. His
monthly syndicated column on global economic issues is published in over 50 coun
tries. Rogoff is an elected member of the “http://www.nasonline.org/” National
Academy of Sciences, the “https://www.amacad.org/default.aspx” American Academy
of Arts and Sciences, and the HYPERLINK “http://www.group30.org/” Group of
Thirty, and he is a senior fellow at the “http://www.cfr.org/about/membership/roster.
html” Council on Foreign Relations. Rogoff is among the top ten on RePEc’s ranking
of economists by scholarly citations. He is also an international grandmaster of chess.
List of Contributors
Julianne Ams is counsel in the Legal Department of the International Monetary

Fund, providing legal advice to the IMF teams working with member countries across
regions and income levels. Her practice also covers legal issues relating to the IMF’s
surveillance over members’ economies and the international monetary system; gov
ernance and corruption; and trade policy. Prior to joining the IMF, Julianne was in
private practice at Debevoise & Plimpton LLP in New York, where she focused on liti
gation and international commercial arbitration. Julianne holds a juris doctorate from
Harvard Law School and a bachelor’s degree in international relations and Japanese
from the University of Virginia. She previously worked in Japan as an interpreter.
Serkan Arslanalp is a deputy division chief in the Strategy, Standards, and Review
division of the IMF’s Statistics Department. Prior to this, he worked in the Regional
Studies Division of the Asia and Pacific Department and the Global Markets Analysis
Division of the Monetary and Capital Markets Department. Mr. Arslanalp joined the
Fund in 2004 and has worked on various county assignments, including Japan and
Ukraine. He has contributed to the Asia and Pacific Regional Economic Outlook and
the Global Financial Stability Report on issues related to demographics, financial
markets, China spillovers, sovereign risk, and financial stability. Arslanalp holds a
Ph.D. in economics from Stanford University and an undergraduate degree in eco
nomics from MIT.
Reza Baqir is a Pakistani economist who serves as the twentieth and current Governor
of the State Bank of Pakistan. He previously worked in several high-profile roles in the
IMF, most recently as senior resident representative to Egypt. During his time at the
Fund he also led several critical reforms on assessing debt sustainability and the Fund’s
lending architecture. He holds degrees from Harvard University and the University of
California, Berkeley.
Wolfgang Bergthaler is senior counsel at the IMF’s Legal Department, where he

advises on legal aspects of IMF financing operations, surveillance, exchange system,
and financial sector issues, as well as sovereign debt, corporate and household insolv
ency, and debt enforcement issues. Before joining the IMF in 2006, he practiced as an
attorney in international law firms in the area of corporate law and mergers and
acquisitions, and capital markets law in Vienna and Brussels. Wolfgang is a graduate
of Karl-Franzens Universitaet Graz (Magister iuris and Doctor iuris), Georgetown
University Law Center (LL.M.), and the Université III Robert Schuman, Strasbourg
(Certificate Erasmus). Wolfgang is admitted to practice in the State of New York
and the District of Columbia, and has been admitted to practice in Vienna, Austria.
List of Contributors xi
He regularly lectures in the United States and Europe and frequently publishes on
issues related to IMF operations and legal aspects of international finance.
Tom Best is an economist in the IMF’s Strategy, Policy and Review Department,
where his current work focuses on sovereign debt issues, including the Fund’s debt
sustainability frameworks. Prior to the IMF, he spent four years at the Bank of
England, working in the International and Monetary Analysis departments. He holds
undergraduate and masters degrees from the University of Cambridge.
Hugh Bredenkamp has been a Deputy Director in the Strategy, Policy and Review
Department of the IMF since 2008. He began his career as an economic advisor to the
UK Treasury from 1982 to 1988. Since joining the IMF, he has worked on countries in
Western Europe, the former Soviet Union, Asia, and Africa, where he was mission
chief for Ghana. He was the Fund’s senior resident representative in Turkey from 2004
to 2007. On the policy side, he helped develop the international debt relief initiative
for low-income countries in the mid-1990s, and has supervised work on various
reforms of the Fund’s lending facilities and on sovereign debt issues.
Lee Buchheit has enjoyed a legal career spanning forty-three years, during which
time he has worked on the sovereign debt restructurings of over two dozen countries
including the Philippines, Ecuador, Russia, Iraq, and Greece. He is the author of two
books in the field of international law and a co-editor of the volume “Sovereign Debt
Management”. Buchheit is an Honorary Professor at the University of Edinburgh Law
School, a Visiting Professor at the Centre for Commercial Law Studies in London and
a Non-resident Fellow at the Columbia University Law School.
Oliver Bush is a Ph.D. candidate in economic history at the London School of
Economics. He has previously worked at the CBI and the Bank of England and stud
ied at the Universities of Oxford, London, and California at Berkeley. His current
research interest is twentieth-century British macroeconomic history.
Guillaume Chabert is a graduate from the leading French engineering school
Ecole Centrale de Paris, the Paris Institute of Political Studies, and the French
Senior Civil Service School (ENA). In 2000 he embarked on his career at the
Directorate General for Local Government at the French Ministry of the Interior,
before joining the Directorate General of the Treasury at the French Ministry of
Finance in 2004. In 2010, Chabert was appointed G20 Project Manager heading up
the team coordinating the 2011 French Presidency of the G20 (and G7/G8) at the
Directorate General of the Treasury. Following two years in Stockholm, where he
managed the Regional Department of Economic Affairs for the Nordic countries, he
was assigned Adviser to the Prime Minister, in charge of the Economy, Finance and
Business, in September 2013. In 2014, he was appointed Deputy Chief of Staff of the
Minister of Finance. In 2015, Chabert took up his present position as Assistant
Secretary for Multilateral Affairs, Trade and Development Policies at the Directorate
General of the Treasury. He is also Co-Chair of the Paris Club and G20/G7 Financial
Sous-Sherpa for France.
xii List of Contributors
Xavier Debrun is an advisor in the Research Department of the National Bank of

Belgium. He completed his Ph.D. in international economics at the Graduate Institute
of International Studies in Geneva, before joining the IMF in 2000, working mostly in
the Fiscal Affairs and Research Departments. In 2006–07, he was a Visiting Fellow at
Bruegel in Brussels and a Visiting Professor of Economics at the Graduate Institute.
His research interests include international policy coordination, currency unions, and
macro-fiscal issues, notably fiscal policy rules, the stabilizing role of fiscal policy, and
public debt sustainability. His work has been published in IMF flagship series, confer
ence volumes, and professional journals.
Chanda DeLong is a senior counsel in the Legal Department of the IMF, where she
advises member countries and staff on the law and policies of the IMF. Her particular
areas of focus include sovereign debt restructuring, corporate and household insolv
ency, and the IMF’s lending policies. Prior to work at the IMF, DeLong worked at the
US SEC. She has a J.D. from the University of Pennsylvania Law School and a B.A. in
Russian Literature from Princeton University.
Barry Eichengreen is the George C. Pardee and Helen N. Pardee Professor of
Economics and Professor of Political Science at the University of California, Berkeley,
where he has taught since 1987. He is a Research Associate of the NBER (Cambridge,
MA) and Research Fellow of the CEPR (London). In 1997–98 he was Senior Policy
Advisor at the IMF. He is a fellow of the American Academy of Arts and Sciences
(class of 1997). Eichengreen is the convener of the Bellagio Group of academics and
economic officials and chair of the Academic Advisory Committee of the Peterson
Institute of International Economics. He has held Guggenheim and Fulbright
Fellowships and has been a fellow of the Center for Advanced Study in the Behavioral
Sciences (Palo Alto) and the Institute for Advanced Study (Berlin). He is a regular
monthly columnist for Project Syndicate and has written and edited a number of
books. He was awarded the Economic History Association’s Jonathan R.T. Hughes
Prize for Excellence in Teaching in 2002 and the University of California at Berkeley
Social Science Division’s Distinguished Teaching Award in 2004. He is also the recipi
ent of a doctor honoris causa from the American University in Paris.
Asmaa El-Ganainy is a Deputy Division Chief at the IMF’s Institute for Capacity
Development (European and Middle Eastern Division). Previously, she contributed to
the IMF’s surveillance, lending, research, and capacity development work at the
European and Fiscal Affairs Departments. Her experience has covered a wide range of
countries, including advanced, emerging, and low-income countries. She has also
contributed to the IMF’s work on several crisis cases, including Greece at the height of
the 2010 European sovereign debt crisis. She has published in the fields of fiscal policy,
labor economics, and economic growth, including in the journal of International Tax
and Public Finance, and the IMF Economic Review. El-Ganainy holds a Ph.D. in eco
nomics from Georgia State University (USA).
Rui Esteves is Associate Professor at the Graduate Institute in Geneva. He specializes
in monetary and financial history, straddling the fields of international finance,
List of Contributors xiii
institutional economics and public finance. His research provides perspective on the
globalization of finance, financial crises, sovereign debt, financial market architecture,
and exchange rate regimes, as well as rent-seeking and corruption in public office.
Luc Eyraud is deputy division chief in the African Department of the IMF. He spent
a large part of his career working on fiscal issues in the IMF Fiscal Department, where
his research focused mostly on fiscal multipliers, fiscal rules, and fiscal decentraliza
tion. Prior to joining the IMF, Luc Eyraud worked at the French Treasury in the
macroeconomic analysis department.
Antonio Fatás is the Portuguese Council Chaired Professor of Economics at INSEAD,

a Senior Policy Scholar at the Center for Business and Public Policy at the McDonough
School of Business (Georgetown University, Washington DC), a Research Fellow at
the CEPR (London), and a Senior Fellow at ABFER (Singapore). He was the Dean of
the MBA programme at INSEAD from September 2004 to August 2008. He received a
Masters and Ph.D. in Economics from Harvard University. He has worked as an exter
nal consultant for the IMF, the World Bank, the Board of Governors of the US Federal
Reserve, the OECD, and the UK government. His research covers areas such as the
macroeconomic effects of fiscal policy and the connections between business cycles
and growth and has been published in several leading academic journals.
Anna Gelpern is a Professor of Law at Georgetown and a non-resident senior fellow

at the Peter G. Peterson Institute for International Economics. She has published
research on government debt, contracts, and regulation of financial institutions and
markets. She has co-authored a law textbook on international finance, and has con
tributed to international initiatives on financial reform and government debt.
Atish Rex Ghosh is the IMF Historian. Formerly, Assistant Director, and Chief,
Systemic Issues Division, Research Department, his previous assignments at the IMF
have included work on the Ukrainian (1994–97) and Turkish (1998–99) stabilization
programs. He works on issues related to the stability of the international monetary
system, including exchange rate regimes, external balance dynamics, capital flows,
and monetary, exchange rate, and fiscal policies. He was Assistant Professor of
Economics and International Affairs, Princeton University, and he holds degrees from
Harvard University and Oxford University. He has published numerous articles and
several books on open economy macroeconomics and international finance. Ghosh is
also the author of a novel.
Ricardo Hausmann is Director of Harvard’s Center for International Development

and Professor of the Practice of Economic Development at the Kennedy School of
Government. Previously, he served as the first Chief Economist of the Inter-American
Development Bank (1994–2000), where he created the Research Department. He has
served as Minister of Planning of Venezuela (1992–93) and as a member of the Board
of the Central Bank of Venezuela. He also served as Chair of the IMF-World Bank
Development Committee. Hausmann was Professor of Economics at the Instituto de
Estudios Superiores de Administracion (IESA) (1985–91) in Caracas, where he
xiv List of Contributors
founded the Center for Public Policy. His research interests include issues of growth,
macroeconomic stability, international finance, and the social dimensions of develop
ment. He holds a Ph.D in economics from Cornell University.
Thordur Jonasson is a Deputy Division Chief in the Debt and Capital Market
Instruments Division in the IMF Monetary and Capital Markets Department. Prior to
joining the IMF, he was a Senior Securities Markets Specialist in the Global Capital
Markets Practice of the World Bank working on developing public and private debt
markets and participating in the Financial Sector Assessment Program (FSAP). He
has also been an expert on public debt management and debt market development for
the IMF, World Bank, and the Commonwealth Secretariat participating in technical
assistance and financial sector assessment missions. His professional experience also
includes the National Debt Management Agency in Iceland where he worked in dif
ferent capacities until appointed Chief Executive. Jonasson has also held positions in
the private sector as an advisor to municipalities and state-owned corporations on
debt management, treasury, and international funding. He has published on capital
market development and debt management.
Kris James Mitchener is the Robert and Susan Finocchio Professor of Economics at
Santa Clara University, Research Associate at the NBER and the Centre for
Competitive Advantage and the Global Economy (CAGE), and Research Fellow at the
CEPR and CESifo. His research focuses on economic history, international econom
ics, macroeconomics, and monetary economics, and he is a leading expert on the his
tory of financial crises. Prior to his current positions, he was professor of economics at
the University of Warwick, and has held visiting positions at the Bank of Japan, the
Federal Reserve Bank of St. Louis, UCLA, and CREi at Universitat Pompeu Fabra. He
is the editor of Explorations in Economic History and serves on the editorial boards of
other academic journals. He received his B.A. and Ph.D. from the University of
California, Berkeley.
Jonathan D. Ostry is Deputy Director of the Research Department at the IMF and a
Research Fellow at the CEPR. His recent responsibilities include leading staff teams
on: IMF-FSB Early Warning Exercises on global systemic macrofinancial risks; vul
nerabilities exercises for advanced and emerging market countries; multilateral
exchange rate surveillance, including the work of CGER, the Fund’s Consultative
Group of Exchange Rates, and the External Balance Assessment; international finan
cial architecture and reform of the IMF’s lending toolkit; capital account management
and financial globalization issues; fiscal sustainability issues; and the nexus between
income inequality and economic growth. Past positions include leading the division
that produces the IMF’s flagship multilateral surveillance publication, the World
Economic Outlook, and leading country teams on Australia, Japan, New Zealand, and
Singapore. Ostry is the author of a number of books on international macro policy
issues and numerous articles in scholarly journals and he has been widely cited in
print and electronic media. His work on inequality and unsustainable growth has also
been cited in remarks made by President Barack Obama. He earned his B.A. from
List of Contributors xv
Queen’s University (Canada) at age 18, and went on to earn a B.A. and M.A. from
Oxford University, and graduate degrees from the London School of Economics and
the University Chicago. He is listed in Who’s Who in Economics (2003).
Ugo Panizza is Professor of International Economics and Pictet Chair in Finance and
Development at the Graduate Institute Geneva. He is also the director of the Institute’s
Centre for Finance and Development, Director of the International Centre for
Monetary and Banking Studies (ICMB), Vice President of CEPR, Fellow of the
Fondazione Einaudi, and Editor of International Development Policy. Previously, he
was Chief of the Debt and Finance Analysis Unit at UNCTAD and worked at the
Inter-American Development Bank and the World Bank, alongside holding teaching
and research posts at the American University of Beirut and the University of Turin.
Michael G. Papaioannou serves as a TA Expert-Advisor at the IMF and is a Visiting

Scholar and Professor at the LeBow College of Business, School of Economics, Drexel
University. He was a Deputy Division Chief at the Debt and Capital Markets
Instruments, Monetary and Capital Markets Department of the IMF until July 2017.
While at the IMF, he served as a Special Adviser to the Governing Board of the Bank
of Greece and led numerous IMF missions on developing economic and financial
policies for emerging market and developed economies, designing and implementing
sovereign asset and liability management frameworks, developing local currency gov
ernment bond markets and instruments, and establishing and managing SWFs. Prior
to joining the IMF, he was a Senior Vice President for International Financial Services
and Director of the Foreign Exchange Service at the WEFA Group (Wharton
Econometrics Forecasting Associates), served as Chief Economist of the Council of
Economic Advisors of Greece, and helding teaching posts at Temple’s FOX School of
Business and the University of Pennsylvania. Papaioannou holds a Ph.D. in Economics
from the University of Pennsylvania and an M.A. in Economics from Georgetown
University, and has published extensively in the area of international finance.
Alex Pienkowski is an economist in the European department of the International

Monetary Fund with a focus on sovereign debt, in particular the resolution architec
ture for debt crises, the costs and benefits of state-contingent debt and the propaga
tion of shocks during crises. He has worked on a range of countries including
Portugal, Argentina, Ukraine, and Mongolia. Prior to the IMF, Pienkowski worked for
the Bank of England for five years. He specialized in international issues in both the
financial stability and monetary analysis departments of the Bank. Much of his time
involved working on the euro area sovereign debt crisis. Pienkowski was also an
Overseas Development Institute fellow in Malawi between 2007 and 2009.
Andrea F. Presbitero is an economist of the IMF Research Department’s Macro-

Financial Division. Before joining the Fund, he was assistant professor at the
Universita’ Politecnica delle Marche (Italy). He is an applied economist who primarily
works on banking and development finance. His research interests also include
monetary policy, international finance, and fiscal policy. His work has been published
xvi List of Contributors
in a range of academic journals and he is Associate Editor of the Journal of Financial

Stability and Economia (LACEA).
Carmen M. Reinhart is the Minos A. Zombanakis Professor of the International

Financial System at Harvard Kennedy School. She was Senior Policy Advisor and
Deputy Director at the IMF and held positions as Chief Economist and Vice President
at the investment bank Bear Stearns in the 1980s. Reinhart serves in the Advisory
Panel of the Federal Reserve Bank of New York, and was a member of the Congressional
Budget Office Panel of Economic Advisors. She has written on a variety of topics in
macroeconomics and international finance and her work has helped to inform the
understanding of financial crises in both advanced economies and emerging markets.
Based on publications and scholarly citations, Reinhart is ranked among the top
economists worldwide according to Research Papers in Economics (RePec). She has
testified before congress and has been listed among Bloomberg Markets Most Influential
50 in Finance, Foreign Policy’s Top 100 Global Thinkers, and Thompson Reuters’ The
World’s Most Influential Scientific Minds. In 2018 Reinhart was awarded the King Juan
Carlos Prize in Economics and NABE’s Adam Smith Award, among others.
M. Belen Sbrancia is an economist at the IMF who received her Ph.D. from the
University of Maryland. Sbrancia’s research interests are mostly related to debt issues,
especially the role of financial repression in reducing debt and sovereign debt restruc
turing mechanisms. During her years at the IMF she has worked on a variety of
topics/countries, but most recently on vulnerable countries such as Argentina,

Lebanon, Ukraine, and now Venezuela.
Philip Stokoe is a senior economist in the IMF Statistics Department Government

Finance Division. He has an in-depth knowledge of the international statistical and
accounting guidance for the measurement of sovereign debt and is an expert in the
measurement of the government and public sector balance sheets, debt, revenues,
expenditures, and related issues. His current role includes analysis of country fiscal
data, as well as providing training and technical assistance in fiscal statistics to coun
try authorities. Stokoe has been with the IMF for five years, but prior to this worked
for the UK Office for National Statistics on classification and related issues for the UK
Public Sector Finances and National Accounts. During his time at ONS, he was part
of the Government Finance Statistics Advisory Committee that contributed to the
production of the IMF Government Finance Statistics Manual 2014, and was a vocal
participant in Eurostat-led discussions to provide new and improved guidance on
government deficit and debt for EU member states. Stokoe’s career in statistics fol
lowed a decade in economic and regeneration consultancy as a consumer of macro
economic statistics for a range of public and private sector clients. He graduated with
a degree in economics and politics from Lancaster University in the UK.
Alexander F. Tieman is deputy division chief in the IMF’s Fiscal Affairs Department.
In this capacity he co-manages a division consisting of around twenty economists
and support staff. In addition, Tieman works on various cross-country and analytical
List of Contributors xvii
projects. His seveteen-year experience at the IMF include a work on program and
surveillance countries; financial sector surveillance and stress testing; and a field
assignment as IMF Resident Representative in Skopje, North Macedonia. Prior to
joining the Fund, he lectured in microeconomics at the Vrije University and Tinbergen
Institute in Amsterdam, the Netherlands and worked at the research department of
the Dutch Central Bank. He has a Ph.D. in microeconomics from the Vrije University/
Tinbergen Institute in the Netherlands.
Christoph Trebesch is a Professor of Economics at the University of Kiel and at the
Kiel Institute for the World Economy, where he heads the Research Area “International
Finance and Global Governance”. Before coming to Kiel, he was an Assistant Professor
at the University of Munich and completed his Ph.D. at the Free University of Berlin,
with research stays at Yale and at the IMF. His research focuses on international
finance and international macroeconomics, economic history, and political economy.
Tim Willems is an economist in the Debt Policy Division (within the Strategy, Policy,
and Review Department) of the IMF. He joined the IMF in 2015, after having spent
three years as a post-doctoral research fellow at Nuffield College, University of Oxford.
Prior to that, he obtained his Ph.D. from the University of Amsterdam, whilst also
spending time at the Dutch Central Bank and the Central Bank of Sweden. His
research has been published in a variety of academic journals.
Mike Williams established the UK Debt Management Office as its first CEO in 1998.
Prior to that he worked for nearly twenty-five years in the UK Treasury. Since leaving
the DMO in early 2003, Mike Williams has worked as an independent consultant on
government debt and cash management. Through the IMF, World Bank, and others,
he has worked extensively with governments across most regions of the world, in par
ticular on debt management policies, and institution and capacity building; on gov
ernment bond market development; and on developing a more efficient and proactive
approach to the management of the government’s cash.
Charles Wyplosz is Emeritus Professor at the Graduate Institute in Geneva where he
was Director of the International Centre for Money and Banking Studies. Previously,
he has served as Associate Dean for Research and Development at INSEAD, as
Director of the Ph.D. program in Economics at the Ecole des Hautes Etudes en
Science Sociales in Paris and as Policy Director of the CEPR. His main research areas
include financial crises, European monetary integration, fiscal policy, and regional
monetary integration. He is the co-author of two leading textbooks and has published
several books and many professional articles. He has served as consultant to many
international organizations and governments and is a frequent contributor to public
media. A French national, Wyplosz holds a degree in Engineering from Ecole Centrale,
Paris, and a Ph.D. in Economics from Harvard University. He has been awarded the
title of Chevalier de la Légion d’Honneur.
Jeromin Zettelmeyer is the Dennis Weatherstone Senior Fellow at the Peterson
Institute for International Economics, a CEPR research fellow, and a member of
xviii List of Contributors
CESIfo. From 2014 until September of 2016, he served as Director-General for

Economic Policy at the German Federal Ministry for Economic Affairs and Energy.
Previously, he was Director of Research and Deputy Chief Economist at the European
Bank for Reconstruction and Development (2008–14), and a staff member of the IMF
(1994–2008), where we worked in the Research, Western Hemisphere, and European
departments. He holds degrees from the University of Bonn and a Ph.D. from MIT.
His research interests include financial crises, sovereign debt, and economic growth.
Introduction
Not since the aftermath of the Second World War has the topic of sovereign
debt taken such importance in public policy debate. Reeling from the effects
of the Global Financial Crisis, public debt-to-GDP ratios in advanced econ
omies are at levels not seen in over half a century.1 Debt vulnerabilities are on
the rise in many emerging markets, with some in outright default, and others
facing non-trivial financing pressures. And the World Bank and the IMF
assess more low-income countries to be in, or at high risk of, debt distress
than at any time since the official debt relief operations of the 2000s. The need
to place this difficult conjuncture into historical context, identify its unique
aspects, and discuss options for the future, constitutes our first motivation for
compiling this book.
This work also seeks to highlight the important distinctions within each
country group. Indeed, among advanced economies, the constraints facing
the United States, a reserve currency issuer, are quite different from those of,
say, Portugal which cannot print its own currency. Among emerging markets,
the challenges facing resource-rich Saudi Arabia are vastly different than
those facing a diversified economy such as the Philippines. Similarly, the
policy trade-offs facing Ethiopia, a large and growing economy, are not the same
as those facing Grenada, a small island state vulnerable to natural disasters.
It is also the case that some policy questions apply to all countries: How
can countries build buffers to deal with the next stress episode when they
have yet to fully recover from the last? How can an aging population be sup-
ported without over-burdening future generations? How can spillovers from
debt crises be reduced without encouraging greater risk taking in the future?
And how can economies achieve their longer-term sustainable development
goals without ending up with excessive debt? These are issues that interest
policymakers, business people, and researchers alike. But they cannot be
1 Throughout this volume, the terms sovereign debt and public debt are used interchangeably. This
represents a departure from usage of these terms in some earlier literature, where sovereign debt
was associated with a country’s total external debt, while public debt connoted a government’s local
currency debt.
S. Ali Abbas, Alex Pienkowski, and Kenneth Rogoff., Introduction In: Sovereign Debt. Edited by S. Ali Abbas,
Alex Pienkowski, and Kenneth Rogoff, Oxford University Press (2020). © International Monetary Fund.
DOI: 10.1093/oso/9780198850823.003.0001
2 Introduction
satisfactorily answered without a holistic understanding of sovereign debt.

This provides a second motivation for the book.
Our final motivation comes from the surprising observation that until now,
there has been no attempt to combine these various themes on sovereign debt
into a single volume, much less one that is accessible to non-specialists. To be
clear, the volume of academic and policy work on this topic is huge, with
many books and papers covering key sub-disciplines in detail, such as: the
drivers and motives of debt accumulation; how to assess debt sustainability;
the importance of sound debt management; and the history and theory of
sovereign default. Yet to our knowledge, this is the first attempt to assemble
these various components into a single text; and one that is designed to be
accessible to both academics and practitioners alike. Stitching the individual
sovereign debt threads into a single text is not just a matter of convenience.
It is a pre-requisite for understanding vital inter-relationships between the
various threads, for example: the role of debt management in improving
debt sustainability; the interplay between the motives to borrow and effective
policies to reduce excessive debt; or how history has shaped our current insti-
tutional architecture for effectively (or not so effectively) resolving debt crises.
Only with a sound grasp of these and other inter-relationships can one assert
a command over any individual sovereign debt sub-topic.
Importantly, understanding of such issues must not be the exclusive preserve
of “experts.” Sovereign debt is one of those issues in public policy that is prone
to much misunderstanding and abuse; where the substance of the matter is
often lost between methodology and ideology. A couple of examples, as follows,
can demonstrate this.
First, the costs and benefits of accumulating, repaying and managing debt
are not evenly shared between agents, creating incentives for biased analytics
by different interest groups. For example, sound borrowing and investment in
human and physical capital today can lead to a better quality of life for future
generations; but excessive and inefficient borrowing can leave a legacy of debt
and austerity for decades to come. Similarly, political decision-makers may
borrow and spend in ways that provide little benefit to the taxpayers that must
eventually service and repay this debt. Fiscal policy fundamentally implies
political choices—choices that may sometimes bias leaders to use debt exces-
sively either to preserve power (for example, in pre-election spending binges)
or to transfer as much of those resources as possible to favored groups before
falling out of power. And even when policymakers have the best of intentions,
if things go wrong, it is the often the poorest in society that suffer most. Thus,
fomenting a balanced, impartial discussion of the wisdom or otherwise of
Introduction 3
public finance decisions, requires a broad understanding of these, and other,

trade-offs.
Second, when a sovereign faces a debt crisis, any resolution decision is
likely to be contentious. Sovereign defaults can be systemic events, paralleled
only by the collapse of a large financial system. Here, spillovers can destabilize
financial markets and other sovereigns, especially in interconnected systems,
such as the euro area. To avoid broader damage, global policymakers may be
tempted to “throw money” at a distressed sovereign and “bail-out” its credit
ors in order to avoid the immediate costs of a restructuring or default. But this
can increase the burden on taxpayers (both of that country, and globally), and
the resulting discontent can itself lead to political and economic instability.
Despite the push for contracts that incentivize collective action on the part of
creditors, sovereigns can still find themselves hostage to “hold-outs” that is,
creditors that seek to stay out of a resolution deal in the hope that they can be
paid in full while others provide debt relief. The inability of global policy
makers to fully tackle this problem has meant that decisions to “bail-in”
(rather than “bail-out’ ”) creditors remains difficult. Making sense of modern-
day sovereign debt crises requires familiarity with these architectural realities
and diverse incentives.
In sum, a broad understanding of sovereign debt, grounded in extensive
cross-country analysis over time, is needed to engender a balanced and con
structive dialogue on some of the most important policy questions of today.
To this end, this book offers a succinct and accessible treatment of all major
sovereign debt themes for academics, practitioners, and policymakers alike.
The book brings together some of the world’s leading researchers and special-
ists in sovereign debt. When inviting authors to contribute, we tried to target
a mix of skills and disciplines, with a view that such cross-pollination is the
best way to get new perspectives and ensure that ideas are accessible to r eaders
of all backgrounds.
The book’s authors have been urged to avoid using economic or legal jargon,
to minimize equations, and to make extensive use of real-world examples to
illustrate points. If there is one overarching objective of the book, it is to make
clear that issues regarding sovereign debt can be complicated and multi-
dimensional, but not intractable. Accordingly, throughout the book we have
urged authors to offer practical policy advice in a way that is accessible to all
readers. The chapters of the book are structured to follow an intuitive
sequence, with certain narratives built throughout the text. Despite this,
chapters can also be read in isolation, with only the occasional need to cross-
reference different chapters.
4 Introduction
Chapter 1 provides a history of sovereign debt from the Middle Ages to the
Global Financial Crisis. It explores the role of sovereign debt in building, and
defending, kingdoms and city-states, examining the role of trust and institu-
tions in deepening the market for such debt. It charts how, as the legitimacy of
governments grew, borrowing was increasingly used to finance infrastructure
and current spending, rather than just wars. The chapter takes a close look at
some of the great build-ups in debt, contrasting the Great Depression with the
Great Recession. It also looks at how debt has been reduced, and how various
policies have supported, or acted against, these debt reductions. History has a
habit of repeating itself, so the chapter concludes with some lessons for policy-
makers today. Chapter 2 focuses on the present, starting with a detailed discus-
sion on what exactly is sovereign debt. It shows the surprisingly large variation
in definitions, and how the choice of institutional coverage, instrument type,
or valuation method can lead to widely different numbers. In the United States
for example, debt could be anywhere between US$20–75 trillion, depending
on which definition is used. Debt is then placed in context to the rest of the
sovereign’s balance sheet, exploring how other assets and liabilities (current or
future, explicit or contingent) can impact our view of a country’s indebtedness.
Finally, the chapter takes a snapshot of the world’s major creditors and debtors
today, and explores how this landscape has shifted in recent years.
Chapter 3 takes a step back to consider why sovereigns borrow, and what
explains the often-high level of debt seen in many countries today. Some of
these motives are “good,” such as to support growth in a recession or to
finance human and physical capital. Nevertheless, high debt in many coun-
tries can also be attributed to political failures and intergenerational transfer
problems. In addition, the chapter looks at the debt overhang problem, and
whether very high debt is associated with lower trend growth. The past dec-
ade of research has largely confirmed Reinhart and Rogoff ’s2 conjecture that
the answer is “yes,” in part because countries with very high debt have less
flexibility in using countercyclical fiscal policy in dealing with recessions,
financial crises, and other exigencies. Reinhart and Rogoff carefully avoid
claiming causation, which is a much more difficult issue and an active area of
research. The issue of whether inherited high debt weighs on growth is not to
be confused (as many polemicists do) with whether being able to run fiscal
deficits can temporarily raise growth (where there is little debate that the
answer is yes, at least qualitatively).
2 Carmen M. Reinhart and Kenneth S. Rogoff, 2010a, “Growth in a Time of Debt,” The American
Economic Review, 100(2), 573–8.
Introduction 5
Chapter 4 considers debt sustainability, a theoretically difficult concept,

which is even harder to pin down empirically. The chapter starts by consider-
ing how debt sustainability is defined, an inherently forward-looking concept,
which ultimately rests on assumptions about what policies a government is
able (or perhaps willing) to pursue to maintain sustainability. Of course, the
trend decline in global real interest rates, which took another major step
down after the 2008 financial crisis, implies higher borrowing capacity, other
things being equal, should the trend be sustained. But as the chapter explores,
countries must be prepared for the possibility it might not be—the risk of not
being able to roll over debt in a crisis can be mitigated through longer-term
borrowing, as discussed in Chapter 5, Debt Management. The chapter con-
cludes with a survey of the latest techniques to assess debt sustainability,
which combine forward-looking theory with backward-looking empirics.
Chapter 5 explores the important role of debt managers in enhancing sus-
tainability. Ultimately debt management is about balancing the trade-off
between the cost of issuance and the riskiness of a country’s debt structure.
The chapter sets out the criteria that governments should consider when mak-
ing decisions on the currency, maturity, or interest rate structure of its debt,
including the potential barriers faced by some issuers, especially low-income
countries. It then goes beyond these traditional objectives and looks at the
impact of the debt structure on monetary policy, capital market deepening,
and public cash management. Chapter 6 focuses on policies to reduce debt
that do not involve a debt restructuring. This includes conventional policies,
such as fiscal consolidation and promoting growth, as well as less orthodox
strategies such as using monetary policy and financial repression. History
shows that all of these strategies have been used in the past, and each have
different costs associated with them. As well as summarizing the various
options available to policymakers, the chapter emphasizes that there is no
“one-size-fits-all” strategy, with country-specific factors (cyclical position,
institutional quality, openness of the economy, etc.) playing an important role
in determining policy design.
Chapter 7 is dedicated to sovereign default, its causes and consequences.
The chapter begins with the problem of how to define default—the range of
defaults used in the literature is a wide spectrum of events that can have very
different economic consequences. This chapter is a fruitful collaboration
between legal scholars and economists; and tries to clarify some of the ten-
sion between how lawyers define a default event, and economists, who, for
example, tend to view a “voluntary” renegotiation of debt as tantamount to a
unilateral default, minus some deadweight costs. Once this typography is
6 Introduction
established, the chapter explores why a default might occur, looks at the role
of mismanagement and misfortune, and also the extent to which these events
can be “self-fulfilling.” Finally, the cost of default is explored, alongside potential
policies that can mitigate it. Chapter 8 continues with the theme of sovereign
default but focuses on the process itself. It gives a “play book” on how a country
might approach a debt restructuring, something that to our knowledge has
not been done before. The chapter gives an overview of the various processes
and institutions that need to be navigated, and also the “carrots” and “sticks”
that can be used to incentivize creditors to participate in an orderly restruc-
turing deal. At the heart of this process is the ability to coordinate creditors in
a way that provides adequate debt relief for the sovereign, without damaging
its ability to engage in international markets in the future.
Chapter 9 seeks to distill the lessons from the previous chapters, and apply
them to the issues faced by creditors and debtors today. In addition to the
rapid increase in debt seen over the last ten years, many countries have also
seen a significant shift in their creditor base towards a structure that might
make debt crises harder to resolve in future. And in advanced countries espe-
cially, low growth partly driven by demographic factors will act as a signifi-
cant headwind to reducing debt in coming years. Potential policy solutions
are divided into those that help preserve ample policy space for responding
to recessions, financial crises, and other sudden expenditure needs, and to
policies to help a country navigate debt difficulties should it face them. To
help make this book a useful reference for economic and legal scholars, we
have also included a comprehensive data annex at the end of this book, which
is also available online.3 This sets out the main sources of data on sovereign
debt, including a description of the data and notes for researchers.
Finally, we have a number of people to thank for their comments, con
structive criticism, and advice when developing this book including Sean Hagan,
Vitor Gaspar, Martin Mühleisen, Hugh Bredenkamp, and Mark Flanagan.
In addition, we would like to thank all of the discussants of the September
13–14, 2018 conference where the first drafts of the book’s chapters were
showcased. These include Marc Flandreau, Michael Bordo, Olivier Jeanne,
Rafael Molina, Richard Hughes, Paolo Mauro, Doug Elmendorf, Elena Duggar,
Jill Dauchy, Michael Gapen, Joseph Gagnon, Margaret Jacobson, Lorenzo
Giorgianni, Graciela Kaminsky, Eric Lalo, and Elena Daly.
3 See Abbas, S. Ali and Kenneth Rogoff, “A Guide to Sovereign Debt Data”, IMF Working Paper, 2019.
1
Public Debt through the Ages
Barry Eichengreen, Asmaa El-Ganainy,
Rui Pedro Esteves, and Kris James Mitchener
1. Introduction
Sovereign debt is a Janus-faced asset class.1 In the best of times it relaxes the
domestic constraint on savings, smooths consumption, and finances investment.
Investors see it as a safe haven, as delivering “alpha,” and as a means of portfolio
diversification. In the worst of times it is associated with debt overhangs,
banking collapses, exchange-rate crises, and inflationary explosions. Investors
see it unenforceable, illiquid, and prone to messy debt workouts.
In this chapter, we use history to analyze both aspects. Historical evidence
provides insight into the seasons of darkness by increasing sample size. This
helps because defaults on sovereign debt are not as frequent as on, say, cor
porate bonds. History also can enrich our understanding of those features of
sovereign debt that are associated with crisis resolution, since there are vari
ations over time in the structure of debt contracts, their enforceability, and
the costs of default.
But a long-run perspective is equally useful for understanding the seasons
of light. History illustrates how governments have used sovereign debt to
shape economic and political development. It shows how they have used it to
help build lasting states, provide public goods and complete infrastructure
projects. Historical experience sheds light on how sovereign debt evolved into
a safe asset, as governments have sought to render it more attractive to invest
ors and, in the course of so doing, underpin the financial system.
We thank Chengyu Huang for excellent research assistance and Carlos Alvaréz-Nogal, Michael Bordo,
Mark De Broeck, Christophe Chamley, Marc Flandreau and Kenneth Rogoff for helpful comments.
We also thank Ali Abbas, Alex Pienkowski and participants at the IMF conference on Sovereign Debt
(September 13–14, 2018) for useful suggestions. Additional information on the data used here can be
found in our IMF working paper by the same name.
1 In what follows, we focus on the debt of national (central, federal) governments and not those of
state governments, local governments and parastatals except where the latter have been explicitly
assumed by the national government.
Barry Eichengreen, Asmaa El-Ganainy, Rui Pedro Esteves, and Kris James Mitchener., Public Debt through the Ages
In: Sovereign Debt. Edited by S. Ali Abbas, Alex Pienkowski, and Kenneth Rogoff, Oxford University Press (2020).
© International Monetary Fund.
DOI: 10.1093/oso/9780198850823.003.0002
8 Eichengreen, El-Ganainy, Esteves, and Mitchener
History does not always unfold at the same pace, and the same is true of
this chapter. In its first half (Sections 2–4) we review two millennia of debt
history in an effort to recover the origins of sovereign borrowing. In the
second half (Sections 5–7), we focus on the most recent century of sovereign
debt history, with its more direct implications for contemporary policy-
makers. Finally, Section 8 concludes.
2. Public Debt as State Building
Though it is challenging to pinpoint precisely when sovereign borrowing

began, two criteria can help us identify when political entities first began
making concerted use of marketable debt instruments. The first is the exist-
ence of the institutions necessary to issue public debt: durable towns, cities,
states, and nations with well-defined borders; contract laws recognizing
polities as entities capable of borrowing; and ledgers for payment and repay-
ment (i.e., accounting systems).2 A second criterion is market constraints: the
immediate demand for credit by the polity must exceed tax revenues; and a
sufficiently large number of individuals other than the sovereign must have
wealth sufficient to lend substantial sums.
Although the written record points to instances of public borrowing as
long as two thousand years ago, borrowing agreements with states were first
concluded with regularity in the period 1000–1400 ad. Loans, such as those
provided by Italian bankers to Edward III during the Hundred Years’ War
(1337–1443), were short term and bore high interest rates. Only after 1500
were territorial states able to borrow long term. Small city-states, in contrast,
appear to have been able to borrow at longer maturities already the in
thirteenth and fourteenth centuries. Epstein (2000) and Stasavage (2011)
argue that city-states were able to borrow long term because they were compact,
merchant-dominated polities with representative institutions capable of
monitoring the sovereign.
An initial spurt of lending came from the papal finances in the 1260s.
Although nominally rich, the Roman Church was hampered by the
geographic dispersion of its property and other income sources, such as
Peter’s pence.3 Engaged in a long conflict with the Holy Roman emperor, the
2 Removing the polity from the borrowing equation and replacing it with a single sovereign ruler
simplifies the institutional requirements, since the contract can be written between an individual and
the sovereign’s creditors.
3 This was the annual tax of one penny from every English householder having land of a certain
value paid to the Papal See from Anglo-Saxon times until it was discontinued in 1534 following King
Henry VIII’s break with Rome.
Public Debt through the Ages 9
Church needed a way of paying the troops of its Italian allies. The solution
of its Tuscan bankers was to anticipate income from Church property and
religious dues. The Church encouraged banking firms to incorporate as joint
stock companies as a way of stabilizing this early form of financial intermedi-
ation. These new banking firms had legal personalities that were independent
of their investors. They had transferable shares. This new corporate form
enabled them to increase their capital base and expand their lending capacity
by selling shares and attracting deposits from wealthy individuals (Padgett
2012). They used the resulting income to grant advances to the Church.
This papal model was then emulated by the city-states of the Italian
Peninsula.4 Debt contracts took the form of annuities called “rentes” and
“renten.” These specified that lenders would receive a stream of interest pay-
ments over their lifetimes or in perpetuity, with the principal never repaid.
Perpetuities were liquid because the stream of payments was not tied to the
original lender.5 They formed the embryo of a permanent stock of public
debt, since perpetual annuities could only be redeemed if the city raised
sufficient revenue to repay the principal, which was the exception to the rule.
(Life annuities, as noted, expired instead with the death of the original pur-
chaser.) A further advantage of perpetual annuities was that they allowed
lenders to circumvent religious doctrine on usury; since perpetuities never
had to be repaid, theologians regarded them as legitimate contracts under
which one party purchased a stream of future income from the other.6
The marketability of perpetual annuities created the conditions for the
emergence of secondary markets, first locally, then nationally and finally inter-
nationally.7 Negotiability transformed these securities into what was in effect a
public financial good. Investors regarded these government debt instruments
as safe, liquid, and therefore eligible as collateral in over-the-counter markets.
Although it is uncertain when sovereign debt was first used as collateral, by the
end of the early modern period (the sixteenth through eighteenth centuries)
it had become the dominant form of collateral for short-term credit in Europe.8
By expanding the collateral space, government annuities contributed to the
4 Albeit from the unpromising start of “forced loans” raised to deal with military emergencies.
Munro (2013) describes how this innovation spread to other European polities.
5 Owing to this liquidity, they bore lower yields than lifetime annuities.
6 The final theological settlement of the issue was arrived at in the fifteenth century. It added add
itional conditions for the legitimacy of perpetual annuities; however, it turned out these were easier to
circumvent than the initial prohibition against interest from mutuum (Munro 2013).
7 Sovereign debt was initially marketed to foreigners by the County of Holland in the sixteenth
century (Neal 2015).
8 De Luca (2008) documents how city bonds were preferred as pledges in collateralized loans (censi
consegnativi) in Milan in the late sixteenth century.
10 Eichengreen, El-Ganainy, Esteves, and Mitchener
development of financial markets, to the expansion of trade, and to the

acceleration of growth.
Most immediately, the acceptability of long-term government debt as
collateral reduced required returns. Lenders had reason to believe, were they
to have to liquidate such collateral, that they could do so at an attractive price.
Politically independent city-states with control of their tax bases were thus
able to issue long-term tradable debt at around 5 percent (Pezzolo 2014),
noticeably below prior rates. The liquidity and acceptability of these govern-
ment bonds in turn put downward pressure on the rates on short-term loans
to the private sector secured by that collateral.
The supply of loans from city-states and territorial monarchies was driven
by the need to finance military campaigns and secure borders. While direct
and indirect taxes on trade and consumption might suffice for maintaining
borders in peacetime, foreign military campaigns or the need to repel incursions
by foreign troops could overwhelm existing revenue streams. The decline of
feudal obligations for military service led sovereigns to create armies for hire,
such as the condottieri of Venice, Florence, and Genoa. With more than 500
European polities vying for power, war was frequent (Tilly 1992). Sovereign
debt thus developed as a vital means of state survival (Stasavage 2011). It enabled
the state to finance expenditures of uncertain size and duration. Thus, as
states evolved and developed, often in response to war, fiscal capacity did as
well (Tilly 1992; Yun-Casalilla and O’Brien 2015).
From the sixteenth century, Europe’s political geography coalesced into the
nation states recognized at the Peace of Westphalia in 1648. In parallel, many
European states evolved from absolutist regimes to more limited government.
Dincecco (2009, 2010, 2011) argues that increased centralization was condu-
cive to the growth of incomes and increased state revenue.9 He posits that
centralized states, in contrast to absolutist and fragmented regimes, imposed
limits on rulers. These states were therefore more responsible fiscally and able
to offer lower sovereign yields. This shift in state structure coincided with the
growing use of sovereign debt to fill fiscal gaps and with the emergence of sec-
ondary markets.10
9 This view is consistent with Alesina and Spolaore (2003), who argue that extreme fragmentation
and decentralization on the one hand and excessive consolidation and centralization of state power on
the other are both likely to be inefficient. Europe in this period can be seen as moving away from
extreme fragmentation but not (yet) to excessive centralization (although problems of fractionaliza-
tion remained, as we recount below when describing the Dutch experience).
10 These observations are consistent with empirical and theoretical work suggesting the existence
of a positive relationship between financial development and a state’s ability to tax (Besley and
Persson 2009).
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comensá á resseguir las planas del seu Dietari, ahont després de
diferentas combinacions numéricas y cálculs de tota mena y d’haver
passat un rigurós exámen á cada un dels reguerons per ahont
s’escorren las imprescindibles necessitats de cada dia, fent una petita
incisió á lo menos apremiant y fins lo sacrifici d’algun accessori en lo
refinament del seu bon gust, la Montserrat ab una interna satisfacció
que saborejava per la primera volta de sa vida, tragué victoriosament
las cuatre pessetas mensuals que ella cregué en conciencia, que
donada sa modestíssima posició necessitava pera esser sócia de las
Conferencias. Es clar que faltavan los extraordinaris, pero tantas
voltas en aquell dia havia sentit parlar de la miraculosa ajuda del cel
en las obras bonas, que no vacilá un moment en creure que, ja en
posició de lo més apremiant, Deu li inspiraría la manera de suplir ab
son ingeni y bona voluntat lo que no li fos possible donar en
metálich.
Una forta sensació de defalliment, li feu de sobte consultar son petit

relotge de butxaca que li marcava un quart de dotze, lo que
aixecantse de la cadira la feu anar en busca de la criada, escruixida de
l’hora que era y del modo com li havia passat la vetlla y lo dia que
acabava de transcorre.
Al arribar enfront de la porta de la cuyna, se presentá devant de sos

ulls lo mateix cuadro de la vigilia de Nadal, é instintivament
recordant á la desconsolada mare, que havia vist aquell dematí y á
duas novas familias de pobres que havia visitat aquella tarde, tot
donant una mirada á la seua casa, que may havia trobat tan hermosa,
y á la seua minyona dormint descansadament junt á uns fogons
provehits y á un ros pá de tres lliuras encetat per dos cantons, la
Montserrat pensant en l’efecte que la vigilia de Nadal li havia fet lo
mateix que en aquell moment estava mirant, exclamá ab la
vehemencia d’aquell cor que acabava de transfigurarse al seráfich
amor de la Caritat:
—¡Deu m’ho perdó!…
A las vellesas.
La casa de don Joaquim Bach havia sofert notables transformacions
desde’l jorn en que deu anys enrera hi vejerem per primera volta á
las seuas fillas, arreglant gentils y rialleras l’equipatge pera marxar á
Larrua.
Aquell bonich primer pis, sempre ben compost, sempre á punt de

rebre, ab sas cambras encortinadas, ab sas cadiras y sofás entapissats
de domás groch, de satí vermell y de satí blau, ab que s’havian
adornat las tres pessas del devant al estrenarse la casa, lo dia que hi
torném á entrar feya dos anys que las blancas cubertas de
madapolam no s’havian tret de las cadiras, ni las glassas s’havian
apartat de dessobre dels miralls, ni dels quadros que en amples y
luxosos marchs s’hi veyan pintats per en Napoleon los retratos d’en
Bach vestit de negre, ab un gruixut chalequero d’or y’l medallon
penjant, y lo de donya Francisqueta ab cos de vellut negre y un
carregat adrés d’or y brillants, que’l pintor pera més satisfacció de la
familia, havia engrandit estraordinariament de tamanyo.
Apesar d’ésser al cor del hivern, las salas estavan sens encatifar, los
balcons sense cortinatjes, las entradas sense portiers y los finestrons
fortament tancats. En lo menjador y en las duas cambras de la part
del darrera, únichs punts de la casa en que s’hi veyan senyals de vida,
també s’hi trobavan á faltar aquella pulcritut y carregament
d’adornos que tant encisava á don Joaquim. Allí hi havia posadas las
catifas de moqueta, pero’ls gerros estavan sense flors, lo piano
tancat, lo musiquero buyt de partituras; per totas aquellas salas s’hi
notava un cert ayre de tristesa, que invadia fins la cambra de las
noyas y lo quarto d’en Felip, en quals llits s’endevinava que feya
llarch temps que ningú hi havia dormit…
Los aucells joves que tanta vida y animació escampavan entorn seu,
cada hu per motius diferents havia abandonat aquell niu, ab tant dalé
fabricat.
L’ Adela, terriblement ferida al cor, en mitj dels joyosos somnis de sa

pensa de divuyt anys, ab la crudel nova de la mort del Arenas, de la
que ningú pogué tréurela d’acusarsen ab la desapietada severitat
d’un jutje, després d’un sens fí d’accidents nerviosos, caygué en un
capficament del que sols ne sortí després d’alguns mesos d’internas
lluytas, pera exposar terminantment á la seua familia, sa ferma
voluntat de ficarse monja en lo convent de Pedralbes. Don Joaquim
s’hi oposá ab totas sas forsas; la seua mare ab las llágrimas de una
pena, que ja no havia de acabárseli may més; la Teresina, ab tots los
arguments que sugeria á la seua imaginació viva de mena lo fraternal
amor que li portava. Més com passat un any vejessin, que no sols no
hi havia medi de persuadirla, sino que anava postrantse y
emmalaltintse de dia en dia, de bon ó de mal grat acabaren per
otorgarli’l consentiment.
Las satisfaccions que no li havia donat l’Adela, en Bach las obtingué

de la Teresina, la qui realisá totas sas esperansas casantse ab en
Cuberta. Més estava decretat que son goig no havia d’ésser sens
espinas, puig que als tres anys d’haverse instalat á Barcelona, en un
magnífich chalet del Ensanxe, que omplia á curull totas las luxosas
aspiracions del antich mantegayre, D. Francisco comensá á dir que
sos negocis de la Isla de Cuba, no marxavan com era del cás, é
insinuá la probable necessitat de tenir que anar personalment á
realisar la seua fortuna, com ell ja volia fer avans de casarse, y que
allavoras en Bach, temorós de que ab la mar pe’l mitj poguessen
sortir destorps al casament de la seua filla, posá tot son empenyo
pera que no hi anés.
Lo colp fort en un principi, esdevingué terrible, desconsolador, quan

se digué qu’en Cuberta desitjava emportarsen á la seua esposa, y’s
vejé que la Teresina, encara que vivament afectada davant del
sentiment de deixar á sos pares, consentia en marxar á América.
Lo gendre, atenuá la cosa ab totas las esperansas possibles: lo viatje

fora curt; lo temps precís pera realisar y posar en ordre y en bonas
mans, lo que de moment no’s pogués vendre y tornar tot seguit; cosa
d’un any, tal volta no hi arribaria.
No hi hagué donchs remey, y ab los ulls plens de llágrimas y un bon

feix d’inquietuts al cor, los pares Bach despediren al moll de
Barcelona á la seua filla Teresina y al seu espós, los qui no’s cansavan
de parlarlos de sa prompta tornada. Més al arribar á América, las
noticias vingueren plenas de dificultats pe’ls enredos esdevinguts en
negocis cinch anys abandonats á mans estranyas; lo cambi cada dia
més pujat del or; la escassetat de compradors que ho adineressin
mitjanament… en fí, que la Teresina que en lo seu país natal no havia
tingut familia, tingué allí un fill y una nena, y un altre fill, y que
passaren dos anys y tres y quatre, ab cartas sempre esperansadas ab
la promesa d’un retorn que no arribava may!…
Ab en Felip, no hi havia que comptarhi. Acostumat á la vida de París

y Londres, no’s trobava manera de tenirlo á Barcelona tres mesos
seguits. Per més que la pobra de la seua mare prenia las mellors
cuyneras y enviava á cercar plats á las fondas de més nom, en Felip
se desganava ab la cuyna barcelonina y’s posava trist, malhumorat y
exijent, fins al punt de no haverhi en la casa un menjar sense un
disgust. No hi havia medi de ferli un senzill roast-beef com lo
menjava á Londres, ni la choucroutte com li servian á París. Don
Joaquim desatinat, li proposá un sens fí de casaments, ab l’esperansa
de retenir aquell fill que semblava un estrany en sa propia casa; pero
en Felip, á cada proposició hi feya unas grossas riallas; era en los
únichs moments que semblava posarse de bon humor… hi reya molt,
pero no n’acceptava cap; y á la primera conjuntura favorable se’n
tornava al extranger. Aixís passaren dos ó tres anys; més com don
Joaquim se resistís ab ferma energía á donarli la exorbitant pensió
que’l seu fill necessitava, aquest qui estava disposat á tot, menos á fer
lo qu’ell ne deya vida de són ó de provincia, se ingeniá pera fer
comisions á Inglaterra y á Fransa, ahont los entristits pares, per la
temensa de que se’ls quedés allí definitivament, continuaren
enviantli cantitats, que si no eran com las que en Felip desitjava, ab
lo producto de lo que ell se feya, ne tenia prou pera passar la vida en
los llochs en que hi vivia á tot son pler. Lo que als vint anys havia fet
obligat pe’l seu pare, prompte li fou un gust, y més tart una costum
que acabá per serli una necessitat.
Una tarde que don Joaquim tornava d’acompanyarlo á la estació del
ferrocarril de Fransa, lo cotxero admirat de que’l senyor al arribar á
casa seua, no baixés del cotxe, obrí la portella y lo trobá ab un fort
atach de feridura. Ab l’ajuda del porter lo pujaren á brassos al seu
pis; s’anaren á cercar los millors metjes, s’aplicaren seguidament tots
los remeys. Deu no’l volgué encara, y en Bach no morí; pero’l
pronóstich científich fou de que restaria impossibilitat pera tota la
vida.
Donya Francisqueta ho escrigué immediatament á la Teresina y feu

tirar un parte al seu fill. Pero la carta hagué de quedarse encara sis
dias esperant correu pera l’Habana; y’l telégrama, s’enviá repetit als
primers hotels de Marsella, de Lyon y de París, puig en Felip havia
dit al marxar, que regularment se quedaria dos ó tres dias en cada
una d’aquestas poblacions, encara que sens deixar los la direcció de
cap; ja que no tenia costum d’escriurels fins á esser aposentat á la
fonda en que habitualment s’hostatjava á la capital de Inglaterra, ó á
la de Fransa quan hi havia de passar llarga temporada. Aixís fou
que’ls telegramas que se li van trasmetre de Barcelona, als deu dias
d’haverne sortit, los llegí junt ab duas cartas de la seua mare, en las
que li deya que’l perill de mort ja havia passat, y li donava tota mena
de noticias y detalls relatius al curs de la malaltia. En la fetxada
darrerament, donya Francisqueta li esplicava que á la fí, s’havia
pogut llevar á en Bach del llit pera assentarlo en un silló fet ab los
darrers adelantos científichs, puig encara que’l cervell funcionava bé,
la llengua estava poch menos que trabada, los brassos sense energia,
las camas inútils… La afligida esposa li comptava que se’l havia de
cuydar com á una criatura; sort de que si be las paraulas sortian
incoherents y enfarfegadas de sa boca, á mida que anava passant
temps, ella comprenia sino totas las qu’estavan més en relació ab las
necessitats de la vida. La pobra senyora termenava la seua carta
pregantli ab tota l’ánima que vingués á cuydar dels interessos de tots
y á compartir ab ella la tasca de cuydarlo.
En Felip li contestá á volta de correo, dihent que si en sa darrera

carta no hagués vist que, encara que malalt, lo seu pare estava fora
de perill, s’hauria posat tot seguit en camí, pero que una volta que de
moment aquell havia cessat, com se feya cárrech d’atendre als seus
prechs, quedantse resoltament á Barcelona, li precisava deixar
liquidats los negocis, que aixís á París com á Londres tenia entre
mans.
Donya Francisqueta s’enterá de la carta ab tota l’alegria compatible

ab las penas que la voltavan y la llegí al seu marit, tot besant entre un
somriure y un doll de llágrimas lo párrafo en que hi parlava del seu
prompte retorn. A la fí, encara que per tant trist motiu, dels seus tres
fills ne recobraria un; en Felip tornaria á casa seua de la que ja no
se’n mouria més: y una volta establert definitivament, podia ésser
que Deu li toqués lo cor pera dar gust al seu pare, que de tant temps
lo instava pera que’s casés, ab la esperansa de fixarlo á Barcelona. Ab
l’estat d’en Bach y ab lo d’ella mateixa, que ja feya temps estava
atacada de dolor reuma y ab l’amenassa constant de que’l mellor dia
se li posés al cor, era impossible que en Felip, no pensés seriament en
casarse.
Al arribar á aquest punt de las seuas refleccions, donya Francisqueta,

se sentí ab necessitat de desahogarse fent participar á en Bach del
goig de las seuas esperansas.
—Ja veurás, ja veurás; com ara’l noy se fará cárrech de la necessitat
que tením de que prenga un determini y’s casará. ¡Ell també
necessita qui’l cuydi… qui’l tregui de la vida que porta!… aquesta
darrera vegada l’he trobat magre, ullerós… ab aquestos grans y tacas
á la pell que no’l deixan… Jo ja corro als setanta; tinch massa anys, la
meua naturalesa forta, s’acaba ab lo temps y los disgustos… ¡Deu
vulla que ell ho reconega y’s casi aviat; d’altre modo als pochs dias,
aquesta casa li cauria sobre! ¡Está tant sola, tan trista! ¡Una noya
jove dona tanta animació entorn seu! Y després la esperansa dels
petits, dels nets… ¿No es veritat que aixó nos fora un gran consol? —
feu la esperansada mare, colpejant carinyosament las balbas mans
del seu marit.
En Bach, exhalá una munió de incoherentas sílabas, ab desitjos de

formar paraulas que no li eixiren; y com vejés que la seua esposa no’l
comprenia, ab un esfors, aixecá de dessobre dels genolls sas
desvalgudas mans, pera fregar repetidas voltas la punta del dit póls
ab la del dit índice.
—¡Ah! —saltá glassadament donya Francisqueta— ¿vols dir que tinga

diners? ¿qué sía rica?… ¡Ditxosos interessos! —afegí veyent ab los
signos del cap de son espós, que li havia comprés perfectament la
idea.
La Teresina, havia també escrit á volta de correu. La seua carta era

molt trista: estava desconsolada per la malaltía del seu pare, al qui
entranyablement estimava, y de la falta que regoneixia los hi feya en
aquesta tribulació: pero de moment era impossible de tot punt que
poguessin tornar. En la qüestió del negoci, cada dia’ls surtian novas
dificultats, novas complicacions… Pera més enredarho lo caixer feya
pochs dias que havia fugit als Estats Units, emportantsen una regular
cantitat… No era cosa pera ferlos anar malament; pero s’havia obert
una informació judicial… era qüestió de temps y de tenir
malhumoradissim á en Cuberta y dificultar la tornada.
Estava certa de que’l seu pare, ab son criteri per aquestas cosas, se
faria cárrech de que no es possible abandonar los interessos.
La pena d’aquesta carta, l’amortiguá lo rebren una d’en Felip, en la

que’ls donava part de sa vinguda pera últims de més. Lo calendari
marcava’l dia disset; no hi faltavan donchs més que uns tretse dias ó
tal volta menos per la seua arrivada.
Donya Francisqueta feu trasbalsar la casa; tot se tragué de lloch, tot

s’espolsá, tot se pulí y en particular la cambra d’en Felip, que la mare
no tenia may prou á gust seu. Lo llit, lo lavabo, lo secretaire, l’armari
mirall, las butacas, tot fou objecte d’un minuciós exámen. Era precís
que l’aposento fos molt bonich, que’l seu noy s’hi trobés ab
comoditat, pera que no tornés á pensar may més en anarsen per
aquestos mons de Deu, lluny dels pares, que á la seua edat y malalts,
era ben natural que tinguessen lo consol d’un fill ó un altre.
Apesar de que’n Felip, si be anunciava la seua vinguda, no’ls hi deya

lo dia ficso, donya Francisqueta envers las darrerías del mes, havia
fet anar cada dia al criat á la estació, pero com aquest tornés sempre
sol y fes dias que en Felip no hagués escrit, la mare comensava á
estar ab ánsia, quan rebé una carta del administrador del Hotel
Bristol de París, innovantlos que feya set dias que’l seu fill se trobava
malalt al llit, y com lo metje en aquell moment acabés de declarar
que lo que al principi cregué tan sols una indisposició sens
consecuencias, eran febres tifoideas, agravadas per estar lo malalt
treballat per altra malaltia infecciosa de carácter crónich, que per la
postració en que’l tenia, aumentava’l perill, se veya precisat á
escríurels que immediatament anés allí algú de la familia pera
cuydarlo y pagar los gastos; donchs d’altra manera, se veurian
obligats á portarlo á una casa de curació.
La pobra senyora quedá glassada, tant pe’l colp dolorosíssim que

rebia en son entranyable amor de mare, com per tenir que pendre lo
determini de lo que debia fer, ella, qui desde’l dia que va casarse no
havia pres per compte seu la més insignificant resolució.
Donya Francisqueta no tenia parents d’aprop y ab los de lluny, gent

de poca posició, lo seu marit no havia volgut que s’hi fes may. Aquest
tampoch ne tenia á Barcelona y ab los de fora ni’s coneixian: las
relacions socials, un colp monja l’Adela, casada la Teresina y per lo
tant acabadas las reunions y festas de la casa, no s’havian sostingut
ab la limitada intel·ligencia de donya Francisqueta, y ab son apocat
carácter, que las penas y’ls anys havian encongit més encara. Pagant
tribut á la moda del dia los Bachs havian tractat las amistats al
engrós, prodigantlas ab tanta estensió, que no’ls havia quedat lloch
pera conreuharne cap de verdadera; y de las anomenadas de
cumpliment, pocas vegadas se’n treuhen los amichs fidels, que fan
sacrificis, que prenen part en las afliccions y ab interés y rectitut se
desvetllan pera treure d’un apuro.
Donya Francisqueta girá donchs los ulls entorn seu y’s trobá sola:
pero en Bach li havia tan dit sempre que ab diners se tenia tot, que la
pobre dona ab las mans plenas de bitllets de Banch, cercava y
cercava, sens que se li acudís lo que tenia de fer pera salvar lo
conflicte que li havia caygut á sobre.
A no veure’l seu marit postrat en un silló, necessitant d’ella, més que

del ayre que respirava, son instint de mare, sense necessitat de
reflexions, l’hauria portada al costat del seu fill, ¿pero cóm deixar á
en Bach al qui ningú comprenia ni cuydava com ella? Es veritat que
hi podia enviar á algú del servey de la casa: pero á aquestos, encara
que’ls diners y la perspectiva d’un viatje á París, los esvahís la por de
la enfermetat, no pendrian determinacions de cap mena, no
demanarian consultas, no llegirian en los ulls del malalt, no li
endevinarian lo que volia y necessitava… serian gent estranya, gent
pagada, indiferenta.
La pobre senyora feta un mar de llágrimas, passá un quart d’hora y

dos y tres fent plans, fent combinacions que per irrealisables, los
refusava tan bon punt los acabava de concebir. Llegia y rellegia la
carta; mirava’l relotje que impassiblement li marcava’l temps que
perdia; y apesar seu, pensava en l’Adela, en las reixas del seu
convent; en la Teresina, en la mar que las separava; en lo seu fill
malalt, sol en una fonda, cuydat per gent estranya, patint, agonitzant
tal volta y després de tres quarts d’hora de infructuosas cavilacions,
sentí los crits incoherents, enrugallats de’n Bach que la cridava, y la
pobre mare mitj folla, com assedegat que troba la font desitjada, hi
corregué, se li posá al costat, li agafá las mans, y entre plors y
gemechs, li llegí la carta y li digué que li tragués una part d’aquell
doble suplici; que li digués lo que havia de fer…
D. Joaquim contragué un bon xich més sa boca torsada y volgué
parlar, frisós de treure á fora lo debassell de ideas que s’apilavan á sa
pensa, davant de la nova, tant dolorosa com inesperada, que acabava
de rebre; mes l’esfors de la voluntat s’estrellá al contacte de la
impotencia física, y sos ulls, únichs membres que’s movian á son
impuls, guspirejaren de aytal manera y sapigueren espressar tant
clarament l’anguniosa exaltació de sa ánima empresonada, que
donya Francisqueta sentintse refer á la vista d’aquell sufriment
major que’l seu, que á la fí podia esplayarlo á sa voluntat, digué:
—¡Asserenemnos, Bach, asserenemnos; y tal volta Deu nos inspiri lo

que havém de fer! Tu, tranquilisat, y del modo que pugas, orientam…
Encara faltan horas pera’l tren de la tarde… aném pensant… ¿Que ’t
sembla, si tu ’t quedessis ab la Quima y jo me’n hi anés ab en Joan?…
¡No t’exaltis! No ho vols… no tingas por… ¡No ’t deixaré!… Cercarém,
cercarém, entre’ls coneguts lo qui’ns sembli qui hi podria anar
¿veritat?
En Bach mogué’l cap en senyal d’afirmació, y donya Francisqueta

comensá á passar revista de tots los amichs y coneguts; pero don
Joaquím que per sa mateixa manera de sentir, judicava molt
justament de la dels altres, y que ab lo poch temps que portava de
malaltia havia pogut veure de la manera com havian anat
desapareixent las relacions de la casa, anava rodant lo cap á tots los
noms que li deya la seua muller, qui després de haver apurat tots los
que li havian vingut á la memoria, esclamá sobtadament:
—¡Ay, ja’l tinch! ¡ja’l tinch! ¡Aquest si que hi anirá! ¡En Francesch
que tinguerem d’aprenent quan los noys eran petits! Aquest que feya
tants anys que no havia estat á casa y que desde que va sapiguer que
estavas malalt, ha vingut tots los diumenges! ¡Tan honrat, tan bo!
¡Ell lo fará’l sacrifici de deixar sa casa per nosaltres y sobretot se
mirará’l noy ab interés! N’ estich certa… n’estich certa.
En Bach acabava de donar ab totas sas forsas son assentiment á las

paraulas de la seua esposa, quan la cambrera prou enterada de lo que
succehía entrá en la cambra cridant:
—Senyora ¡un parte! ¡un parte! ¡Tal volta diuhen que no hi pujin!
¡que está mellor!
Donya Francisqueta sentí un violent sotrach al cor y abalansantse á

la cambrera li arrebassá’l telégrama, esqueixá ab mans tremolosas la
fulla del paper tancat ab goma y llegí:
Monsieur Philippe Bach, mort deux heures matin: détails comptes

poste.
La pobre mare no sabia’l francés, pero tan bon punt obrí’l parte,
comprengué de sobte lo mot que deya mort; y llansant un crit,
caygué en terra, presa d’un fort accident nerviós.
En Bach ab los ulls que li saltavan del cap, sens poguer llegir lo paper
que la seua dona tenia estretament tancat en sas mans, pero
endevinant de sobres lo seu contingut, torná altra volta á sos crits
estridents, que’ls criats escoltaren ab la indiferencia de la gent
mercenaria, y als que donya Francisqueta ja no podia respondre per
haberla portada á pes de brassos á un dels llits de las salas del
devant.
De moment, los vehins ompliren la casa. Quan los coneguts
sapigueren la nova, molts hi anaren; alguns se retragueren dihent
que una volta que la senyora era al llit, esperarian que’s posés mellor;
altres deixaren tarjetas; y al poch temps aquella professó de gent
estranya que pujava la escala ab un ayre indiferent, que procurava fer
compungit en l’instant que trucava á la porta ó allargava la má á don
Joaquím pera repetirli com fetas ab un mateix patró, las paraulas que
havia dit lo company que acabava de sortir, aná aclarintse fins á
tornar á deixar en sa trista buydor, la espayosa casa del antich
mantegayre.
Donya Francisqueta tingué de quedarse al llit. Ab l’estat nerviós se li

havia barrejat lo dolor reuma, y per més que ab gran insistencia
demaná que ab lo silló de rodas li portessin en Bach al seu quarto,
com lo metje per la temensa de que se li reproduhís l’atach digué que
no ho permeteria fins á estar més forta, no hi hagué medi de que’l
servey la complagués en una cosa que’l facultatiu havia privat, y que
havia de donarlos la seua feyna, y tal vegada aumentar la excitació de
don Joaquím, ab lo que’l criat que dormia aprop seu, era segur que
no tindria un moment de repós en tota la nit.
Mes passats alguns dias, una tarde com donya Francisqueta hagués
ja menjat una mica y’s trobés bastant millorada, aprofitant una de las
moltas estonas en que la seua cambrera la deixava sola, se vestí com
pogué y tirantse l’edredon dessobre de las espatllas, tot agafantse per
las parets, arribá fins al quarto d’en Bach, qui al véurela llensá una
mena de alarit d’alegría.
Apesar de que’l metje, comprenent la seua ansietat, cada dia li havia
donat l’asseguransa de que la malaltía de la seua esposa era un
accident, tan sols agravat pe’l dolor reuma y per la estremada fredor
del hivern, aquell marit, que durant tot lo temps de son matrimoni,
s’havia acostumat á veure en la seua dona una mena de maniquí, al
qu’ell tenia la creencia de que li donava vida y acció, y que á bon
segur sis anys enrera hauria pogut desapareixer de la familia sens
que li hagués semblat que perdia cosa d’importancia; durant aquells
dias en que havia pensat que se li podia morir ó tal volta quedar en la
trista situació en que ell se trobava, la seua pena havia estat tant
fonda, que al véurela entrar en lo seu quarto, demacrada y envellida,
pero caminant per sos propis peus, li dirigí la més tendra y amorosa
mirada, que la encongida muller havia rebut del seu espós durant sa
llarga vida matrimonial. Mes la desolada mare, sens adonarse del
lloch que per tant tristos aconteixements adquiria en lo cor de’n
Bach, tan bon punt lo vegé y contemplá aquell quadro de tristesa y
soletat, avivántseli en la imaginació la persistent idea d’aquell fill,
mort lluny dels pares, assistit per gent estranya ó tal volta sense
ningú que li aixugués la suor, ni acostés á sos llavis assedegats una
sola gota de cordial, esclatá en un mar de llágrimas, més abundosas
com més s’esforsava pera contenirlas, y tambalejant arribá fins á en
Bach, li tirá’ls brassos al coll y flaquejantli las camas aná lliscant en
terra, fins á amagar sa cara banyada ab plors dessobre’ls genolls del
seu marit.
En Bach afalagá ab sas balbas mans los emblanquits cabells de sa

muller, y sentint serrárseli’l cor devant d’aquell sentiment que sa
trabada llengua no podia aconsolar, girá’ls ulls envers als vidres de
son balcó entre’ls quals se dibuixava lo boyrós espay de son jardí, que
las primeras ombras del capvespre embolcallavan ab son plomisch
mantell. Mes de sopte per entre mitg d’aquella vegetació migrada,
que esllanguidament s’estenia per dessobre dels parterres, d’aquellas
voradas de vaynillas y rosers formant manats de tronchs nuosos y
sechs, d’aquells plátanos americans que assotats pel vent gelat de las
derrerías del mes de Janer, onejavan sas llargas fullas grogas
esqueixadas en cent bossins, per entre mitj d’aquells caminals
deserts que en alguns llochs l’herba clapava, per un d’aquestos
estranys fenómenos de la imaginació, li semblá que totduna hi veya
aparéixer la enlluhernadora claror del sol de Juny, cayent de plé
dessobre del frondós jardí de son chalet de Larrua, il·luminant la
gentil silueta, bulliciosa y somrissenta de sos tres fills y la d’aquella
Montserrat, joveneta, hermosa, ab sos grossos ulls blaus que’l
miraban plens d’un sentiment dols, dols, com lo d’un ángel del cel…
Don Joaquím ab la pensa enfonzada en lo mon dels recórts, los veya
bé á tots quatre agrupats devall de las acácias del costat del surtidor,
ellas assegudas brodant ab sos telers á la falda, en Felip, apenas als
disset anys, alt, moreno, escardalench de galtas, pero fort, plé de
vida, enjogassat esfullant manats de flors dessobre’ls caps de las
noyas, que’l vent de la marinada esbullava tot ajuntant uns ab altres
los bucles de sos cabells.
Un jemech trist, adolorit, eixí penosament dels torsats llabis d’en

Bach y duas llágrimas grossas, rodonas, bullentas, lliscaren per
dessobre de la arrugada pell de sas galtas. Foren las absoltas
consagradas á sas il·lusions de pare, que’l pobre home no sabia
esplicarse com en mitg de sa opulenta posició, la sort s’havia atrevit á
trossejarlas!…
Barcelona, Maig de 1893
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leading experts on sovereign debt across a range of dis­cip­lines—economics,

Editors Bios viii

Julianne Ams is counsel in the Legal Department of the International Monetary

Wolfgang Bergthaler is senior counsel at the IMF’s Legal Department, where he

xii List of Contributors

Xavier Debrun is an advisor in the Research Department of the National Bank of

List of Contributors xiii

Antonio Fatás is the Portuguese Council Chaired Professor of Economics at INSEAD,

Anna Gelpern is a Professor of Law at Georgetown and a non-resident senior fellow

Ricardo Hausmann is Director of Harvard’s Center for International Development

xiv List of Contributors

Michael G. Papaioannou serves as a TA Expert-Advisor at the IMF and is a Visiting

Alex Pienkowski is an economist in the European department of the International

Andrea F. Presbitero is an economist of the IMF Research Department’s Macro-

xvi List of Contributors

in a range of academic journals and he is Associate Editor of the Journal of Financial

Carmen M. Reinhart is the Minos A. Zombanakis Professor of the International

Philip Stokoe is a senior economist in the IMF Statistics Department Government

List of Contributors xvii

xviii List of Contributors

CESIfo. From 2014 until September of 2016, he served as Director-General for

sat­is­fac­tor­ily answered without a holistic understanding of sovereign debt.

public finance decisions, requires a broad understanding of these, and other,

Chapter 4 considers debt sustainability, a theoretically difficult concept,

8 Eichengreen, El-Ganainy, Esteves, and Mitchener

2. Public Debt as State Building

Though it is challenging to pinpoint precisely when sovereign borrowing

Public Debt through the Ages 9

10 Eichengreen, El-Ganainy, Esteves, and Mitchener

development of financial markets, to the expansion of trade, and to the

—No’m posi’l sopar á taula. Quan jo’l vulgui ja l’avisaré.

Seguidament entrá al seu dormitori y una volta desfeta del abrich

La noya Gil ab la vehemencia de son carácter, no’s veya ab cor de

Una forta sensació de defalliment, li feu de sobte consultar son petit

Al arribar enfront de la porta de la cuyna, se presentá devant de sos

Aquell bonich primer pis, sempre ben compost, sempre á punt de

L’ Adela, terriblement ferida al cor, en mitj dels joyosos somnis de sa

Las satisfaccions que no li havia donat l’Adela, en Bach las obtingué

Lo colp fort en un principi, esdevingué terrible, desconsolador, quan

Lo gendre, atenuá la cosa ab totas las esperansas possibles: lo viatje

No hi hagué donchs remey, y ab los ulls plens de llágrimas y un bon

Ab en Felip, no hi havia que comptarhi. Acostumat á la vida de París

Donya Francisqueta ho escrigué immediatament á la Teresina y feu

En Felip li contestá á volta de correo, dihent que si en sa darrera

Donya Francisqueta s’enterá de la carta ab tota l’alegria compatible

Al arribar á aquest punt de las seuas refleccions, donya Francisqueta,

En Bach, exhalá una munió de incoherentas sílabas, ab desitjos de

—¡Ah! —saltá glassadament donya Francisqueta— ¿vols dir que tinga

leading experts on sovereign debt across a range of disciplines—economics,

Editors Bios viii

satisfactorily answered without a holistic understanding of sovereign debt.