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What’s at stake: As many authors worry about the consequences of the peculiar interpretation of the pari passu clause in the Argentina saga, a relatively unnoticed proposal, which was discussed on June 13 2014 by the Executive Board of the IMF to reform its lending framework, could also have large implications in the context of sovereign debt vulnerabilities. If introduced, the new framework would most likely eliminate the systemic risk waiver, which allowed the Fund to lend large amounts to countries whose debt didn’t qualify as sustainable with high probability and would instead introduce the possibility of maturity extensions as...

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