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Economic and Financial Committee

Previous work on CAC following G10 commitments

In April 2003 the EU Member States decided to include collective action clauses (CACs) in their international debt issuance to promote international efforts for orderly restructurings in the event of sovereign debt crises. Following this, in September 2003, the EFC agreed on a set of core clauses to be included in the loan documentation. In November 2004, the EFC assessed developments with respect to the implementation of the commitment on the basis of a report by the EFC Sub-Committee on EU Government Bonds and Bills Markets. The EFC confirmed positive development in the implementation and recognized that after EU enlargement in May 2004, the commitment now covers 25 Member States.)

In his statement to the International Monetary and Financial Committee (IMFC) meeting on 12 April 2003, Mr. Christodoulakis, Minister of Economy and Finance of Greece, in his capacity as Chairman of the EU Council of Economic and Finance Ministers, announced that:"The EU welcomes the work done with respect to the drafting of model collective action clauses (CACs) by the G10, and the contribution of the private sector to this work.It also welcomes Mexico’s inclusion of CACs in a recent bond issue, and its intention to continue to do so in the future. It encourages other Emerging Market Economies to follow suit. EU countries note the benefits of a harmonised approach to the inclusion of CACs in bond contracts, and remain committed to leading by example.Therefore the EU will use contractual provisions based on the framework developed by the G10, and where necessary in accordance with applicable law and adjusted to local legal practice, in their central government bonds issued under a foreign jurisdiction and/or governed by a foreign law by the end of this year.Thereafter, EU Member States will no longer issue such bonds without any CACs."

At their meeting in Stresa, Italy, on 13th September 2003, EU Finance Ministers and Central Bank Governors endorsed a ‘common understanding’ on the implementation of this EU commitment, originally prepared in the EFC Working Group on Government Bond and Bill Markets.

The framework developed by the G10 and presented in the report of the G-10 Working Group on Contractual Clauses can also be found at the website of the Bank for International Settlements (BIS)