International Lending and Sovereign Debt RPN

This policy network will focus on three main challenges. First, rising debt levels and growing risks of debt distress. In advanced economies, both public and private debt levels are higher than at any point in the past 150 years. Also, emerging markets and developing countries are increasingly indebted both at home and abroad. In the coming years, debt sustainability will therefore remain a major concern, which is intimately linked to the development of interest rates. Should global rates continue to rise, a new wave of sovereign defaults is a possible scenario.

Second, we are witnessing the rise of new creditor powers. China, in particular, has become an important global creditor over the past 20 years. But also India or Arab countries are increasingly prone to lend and invest across borders. Such “Southern” creditors often rely on state-owned banks and state investment funds; they develop new types of lending contracts that blend elements of official and private finance; and they often export their capital via tax havens. These trends are not well understood. Relatedly, we are seeing new regional lending facilities spring up in Asia, Latin America, and Africa, and new crisis fighting tools, such as the growing network of central bank swap lines by the People’s Bank of China. Taken together, international finance is becoming more heterogeneous and multipolar.

These developments have major implications for the international financial architecture and give rise to new, pressing policy questions. Will the rise of China accelerate financial globalization or rather contribute to reversing it? Will international lending be increasingly politicized in the coming years? How can incumbent institutions like the IMF or the Paris Club be reformed to adapt to the new more multipolar order? How can the more heterogeneous global lending markets be regulated and monitored? How can governments around the world deal with the growing debt burdens? And how can debt crises be resolved more effectively, especially in cases where a large share of the debt is held by official creditors like Western central banks or Chinese state-owned banks?

The International Lending and Sovereign Debt RPN will bring together leading researchers and policymakers interested in these questions. Its main aim is to learn, discuss with each other, and produce new knowledge that can be shared with policymakers and the general public - via research papers, policy reports and columns on If funding permits, the aim is to meet at least once per year, probably in Europe.