In such cases, countries have struggled with higher inflation, higher borrowing costs and eventually  10  As former Chairman Ben Bernanke once explained: “The key to explaining why price stability promotes stability in both output and employment is the realization that, when inflation itself is wellcontrolled, then the public’s expectations of inflation will also be low and stable.
This lack of an effective debt restructuring system at the international level encourages free riders such as vulture funds to exploit the generosity of other creditors who provide debt relief, which in turn reduces the incentives on all creditors to accept a reduction in their claims on the sovereign.