The debts of countries new methods of treatment and re-scheduled
The debts of countries new methods of treatment and re-scheduled
Hanging between UNH and other debts of the debtor countries a shadow over the international economic system. In some stages of this debt it is about to disrupt influential in the global financial system and a combination of factors lead to the alleviation of their effects, including innovations in the financial markets in order to accommodate the results of these debts, and the regulatory and monetary authorities in most countries of the world played an important role in the protection and maintenance of the banking system from the effects of the debt crisis and its negative effects expected. Some debtor countries have found in borrowing from international banks a way appropriate to overcome the face of financial difficulties and encouraged Unfortunately, international banks strongly borrowing operations, was estimated value of the resources preliminary to these countries one of the main factors in the light of which were decided lenders avail these loans banks. Recent years have seen unfavorable developments for these debts, including local developments for indebted countries such as declining raw materials prices, and the inability of economic management in some of these countries to cope with these developments, as well as some international factors, such as fluctuating levels of interest rates and exchange rates.
The debt problem in the basis of which came as a result of the large expansion in credit from international banks. As is well known, these banks - a lender for about 70% of the total debt of countries Almedinh- become cautious about years close since in the provision of new funds to these countries is what makes the money that is repaid from the debt exceeds the size of the new lending volume and thus emerged as a transformative gaps countries city.
Achieving stability in the economic growth of the countries of the city requires the provision of resources to be submitted from industrialized countries to the group of those countries. They also indebted countries could in theory to address this dilemma by gradually get out of this debt process and that if these countries were able to achieve continuous economic growth. This trend is the basis upon which several initiatives were essentially focused on finding a structural correction and adjustment policies that will strengthen the continuous growth rates in these countries.
And based on several factors, including: what to prices of raw materials, and the expansion of international trade, and to achieve appropriate levels of interest rates and exchange rates.
The premise behind this strategic initiatives to limit the adverse effects which affected the debts of metropolitan countries as a result of the remarkable decline witnessed in prices of raw materials in recent years and the emergence of some trade barriers in front of debtor countries exports, as well as the adverse effects of changes in exchange rates on exports and levels of demand for these countries. As well as a result of following the industrialized countries
Tight monetary policies of a significant increase in interest rates and its impact on the rising debt service size.
If the main objective of the strategy to address the global debt and of increasing growth rates in the debtor countries, but it has not been observed at the same time easing the concerns that have emerged about the negative effects of the problem of indebtedness on the global financial system is achieved.
The estimates statistical banking suggest that the overall size of this debt will increase in the next few years, meaning that the problem remains represented a heavy burden on a large number of debtor countries and thus remain a source of potential shocks may in the global banking system in Almstqubl.kadd worked some markets Finance unit to mitigate the impact of some of the debts to international banks and through the innovation of new tools to convert this debt to other types of assets. Most of the financial regulatory authorities have also stepped up in a number of countries to support their banking systems and protect them from the effects of the debt crisis through the development of capital requirements for banks and their relation to asset-weighted degree of risk, as well as by increasing the required provisions against loans from banks. These standards and requirements of the country to another have varied.
Accordingly, banks have locked the severity of the risk of debts which were threatening the global banking system can address the problem early by making adjustments in the structure of their uses, as well as do most banks to strengthen their capital base and improve the quality of its assets that helped her build allocations resulted in monetary value to the size of its debt reduction towards those countries.
Although these banks have been reluctant to write off a portion of its debt operations, but it resorted to the style of the securitization of these debts, ie converted into financial instruments for trading in secondary markets at prices discounted. These measures have been applied by methods included identifying innovative technical value of securities resulting from the conversion of this debt on the basis of a realistic and to reflect market prices, there is also a part of the debts were converted to direct investments in the debtor countries.
It is clear that the development and increase the efficiency of global financial markets has contributed to the promotion of these conversion processes and the development of alternatives available to convert the debt and reduce the sizes.
Financial markets have been successful in the development of several key methods used in the debt and benefits of treatment and turn to other types of assets, including:
1. The debt swap property rights, a tactic that allows foreign investors to invest in the indebted countries. And begin to move through the purchase of foreign currency-denominated bonds issued by the debtor country and prices rights.
As a next step the central bank in the debtor country to buy these bonds from foreign investors against payment in local currency, then the investor will in turn using the local currency direct investment in local companies and projects, as it can also convert debt denominated in local companies in foreign currency to the ownership of the local currency's rights in These companies.
One advantage of barter, it contributes to the payment process of economic growth in the debtor countries through the area open to the possibility of encouraging obligations denominated in foreign currency for the countries of the city.
2. securitization of debt, a conversion of debt into securities trading, bringing this process allows the creditor bank to get rid of those loans at far less than the face value.
3. buy back debt, and enables this method to debtor countries to buy debt from commercial banks at market prices, which are usually at a lower price than the face value.
The banks have to strengthen its own money and raised their allocations lows against bad debts. Global banks have made progress in the face of the problems caused by the inability of some countries to service and repay its debt.
Banks have made great strides in this area with the support of the regulatory authorities in their countries through two methods you used these banks are:
A large number of banks built a large part of the provisions against the risk that debt. And different ratios and the quality of these provisions by the regulatory and tax policies of the countries concerned.
Increase private funds to banks through reserves and equity issues, tools and other capital.
Official debt sufficient attention the problem has not been in the past is no doubt that in the light of these debt concentration official bodies in poorer countries it is clear that it takes a strong interference from official authorities in the global community to move the situation and create momentum towards a solution to the suffering of the countries concerned.
That would reduce the debt that lends itself to the debtor countries to focus on the economic reform process and raises her accumulated debt burden.
For creditors, the debt would reduce the methods used in that reduce the risks related to entitlement to the debtor countries and ensure the flow of payments. Hence the importance of the commitment of the countries concerned following the serious economic policies so as to ensure the achievement of the desired growth rates that are not solving the debt problem without them.
The main creditor countries have begun to face the reality in the past few years. It seems to have realized that there is a need to adjust the strategy address the debts so that they take into account the possibility of debt reduction and appropriate size or interest in some cases.
And it figured some features of this shift in the positions of these countries during the past meetings of the International Monetary Fund and the World Bank to confirm this new trend towards realism in the treatment of debt and structural re-scheduled for the purpose of lowering the interest rate.
There is no doubt that there are certain conditions that lead to a reduction in the weight of the problem for the countries of the main city, through the global climate and the availability of appropriate structural economic reforms and resort to various market available methods to reduce indebtedness. And it must be accompanied by political determination and resolve on the part of all parties and accompanied by appropriate growth in exports debtor countries as this would prevent some countries major city to the sound development of the models.