The wonder-clause

The Greek debt crisis prompted EU officials to embark on a radical reconstruction of the European sovereign debt markets. Prominently featured in this reconstruction was a set of contract provisions called Collective Action Clauses, or CACs. CACs are supposed to help governments and private creditors to renegotiate unsustainable debt contracts, and obviate the need for EU bailouts. But European sovereign debt contacts were already amenable to restructuring; adding CACs could make it harder. Why, then, promote CACs at all, and cast them in such a central role in the market reform initiative? Using interviews with participants in the initiative and those affected by it, as well as observations at policy and academic meetings, we attempt to shed light on the puzzle and draw implications for the role of contract techniques in market construction. Journal of Comparative Economics 41 (2) (2013) 367-385. American University, Washington College of Law, 4801 Massachusetts Avenue, NW, Washington, DC 20016, United States; Duke University, School of Law, 210 Science Drive, Box 90360, Durham, NC 27708, United States. (C) 2013 Association for Comparative Economic Studies Published by Elsevier Inc. All rights reserved.