Orderly Sovereign Default in the EU: a Strong Case for European Regulation

This paper endeavours to offer a view on the need of an orderly sovereign default process in the EU. Paragraph 1 provides an introduction. Paragraph 2 illustrates why, a Greek or other peripheral EMU country default would not trigger a sistematically relevant banking crisis which could entail the need of additional (substantial) state aids. paragraph 3 briefly comments on the indirect, but relevant, costs associated with a sovereign default in the EMU area. Paragraph 4 considers the May 2010 sovereigns' rescue package and whether it is compatible with an orderly default procedure. Paragraph 5 calls for the swift introduction of a European statutory sovereign default procedure also to reconcile properly the May 2010 initiative with thei legal basis. Paragraph 6 lists a series of statutory provisions which should be incorpored into the European sovereign default procedure. Paragraph 7 concludes, briefly commenting on the idea of a European Monetary Fund and its legal basis under the current TFEU.