In the debate on European reforms, one often hears the idea that the Eurozone needs a sovereign debt restructuring mechanism (SDRM) (see, for example, the ‘non-paper’ that was circulated at the latest Eurogroup meeting (Schäuble 2017); also Sapir and Schoenmaker 2017, Weder di Mauro and Zettelmeyer 2017). This idea should be put to rest. There are better and safer ways to cope with the high legacy debts accumulated during the financial crisis. The arguments in favour of a European SDRM echo an older debate on the role of the IMF. They go as follows. Insolvent sovereign debtors tend to restructure their debt too l ... (full story)