This approach, which was detailed in a joint paper published in 2001, was designed to provide the right incentives for debtors and creditors. It contained three basic elements. First, “presumptive limits” to official assistance, which would be known in advance. Secondly, the possibility of exceptional official lending, but only in the unlikely event that a crisis threatened global financial stability.
Third, orderly standstills or temporary suspensions of debtservice payments to give distressed debtors some time to take steps, including debt rescheduling, to address their problems. Since that time, the G-7 finance ministers and central bank governors have adopted much of this approach in the context of their Action Plan for crisis prevention and resolution.