What Citizens Owe: Two Grounds for Challenging Debt Repayment

With the dismantling of the Bretton Woods system in 1971, the global economy entered a period of increased financialization. 2 Easier access to credit resulted in increased levels of sovereign indebtedness, contributing to an ever-greater climate of financial fragility. 3 In the absence of an international mechanism to restructure sovereign debt, 4 responses to sovereign debt crises today combine several ad hoc measures. The response to Greece's sovereign debt crisis at the heart of the European Union is but the most recent example of a much more general development that has come to characterize sovereign borrowing. 5 Amidst the many uncertainties that govern debt repayment in this highly financialized economy, one background norm remains largely unchallenged: the idea that sovereign debt must be repaid by the citizenry of the debtor country.