Unlike relations with private borrowers – where banks have significant informational advantages compared to other creditors – there is no privileged information on the debt of a nation. As a consequence, I fail to see the reason why the financing of states should not mainly be a matter for the capital markets.
And I very much welcome the international community’s efforts to tackle this topic: this summer, the G7 finance ministers and central bank governors identified the regulatory treatment of sovereign debt as a major topic to work on. Also, the Basel Committee on Banking Supervision has been working on sovereign debt for almost a year now.