I would argue that this can lead to synergies by facilitating the rehabilitation of viable companies in a manner benefiting all the creditors – including the public authorities – in the longer term. Having said all that, there is no doubt that financial restructurings and insolvencies do contain several distinguishing features compared with corporate reorganisations, besides the importance of confidence with which I started. Indeed, that probably explains why much of the debate on the Model Law is on whether its principles can be applied to the insolvencies of banks and other financial institutions. Different views on this meant that the Law had to contain an effective opt-out for banks and insurance companies. I would certainly agree that depositors or policyholders are in a different position from ordinary creditors. They are likely to have less information, be greater in number, and be less well organised to recover their assets than professional creditors. So any application of corporate  4  BIS Review 67/2001  workout and insolvency principles to international financial insolvencies would have to allow for depositor and policyholder protection schemes. The role of supervisors would also, of course, need to be recognised explicitly. In particular, the principles underlying corporate workouts and insolvencies would have to be consistent with internationally recognised principles of banking and insurance regulation. In the EU framework, that requires consistency between cross-border corporate sector initiatives such as the Model Law and ILG Principles and the EU passport system and principle of home state responsibility for banking and insurance supervision.

My speech this morning, therefore, provides an opportunity to signal the Bank’s support for INSOL’s mission to take a leadership role in international insolvency and credit issues and to bring about greater international co-operation among the main players. The growing interest by a number of international organisations in the design of orderly and effective corporate insolvency regimes, and in the encouragement of greater co-operation in cross-border corporate insolvencies, suggests you have been successful in that objective. I think this has been greatly assisted by the important work which the INSOL Lenders Group has been co-ordinating in developing a set of principles governing corporate workouts at the pre-insolvency stage. But corporate workouts represent just one strand in financial restructurings more generally. There are two others I want to cover; and these are, first, restructurings of financial institutions, including banks, and, second, sovereign debt workouts. Indeed, in many instances, restructurings in the corporate sector will need to proceed in tandem with those in the financial and sovereign sectors. I would argue that, in all three cases, a collective approach by the different participants in the private and public sectors, and effective co-ordination among creditors and debtors, should help to preserve value. So I would like to consider today the extent to which these differing approaches raise common themes, and also whether there are distinguishing features which could affect the interactions between the three strands.