The world needs a Multilateral Sovereign Debt Resolution Mechanism for the same reasons there are domestic frameworks for bankruptcy at the national level:

• to ensure an orderly process for countries unable to repay their debts;
• to guarantee that some creditors do not benefit at the expense of others;
• to avoid moral hazard;
• and to ensure a balance between debtors’ and creditors’ needs and interests.

For sovereign debt there is also the need to protect human rights, the economy, and the right to development, by enabling insolvent debtor countries to resume their economic activity and development process.

All countries facing risks of debt distress should have access to a timely and comprehensive process to restructure their debts, including debt cancellation when needed. This is not guaranteed by the current global financial architecture. As established in the UN 68/304 resolution for a legal framework on debt restructuring, a Multilateral Sovereign Debt Resolution Mechanism would work to increase the efficiency, stability, and predictability of the international financial system.