Restructuring domestic sovereign debt: Fiscal savings and financial stability considerations

Sovereign domestic debt restructurings (DDRs) have become more common in recent years and touched upon a growing share of total public debt. This, however, should not come as a surprise. While the market for international (i.e., foreign law) sovereign debt securities has a volume of roughly $1 trillion, the total outstanding amount of domestic securities is about 40 times as large. In Emerging markets and developing economies, where debt restructuring is likelier to happen, the share of domestic debt in total debt has risen from 31 to 46 percent from 2000 to 2020. During 19902020, there were roughly as many DDRs (30 episodes) as stand-alone external debt restructurings (EDRs) (27 episodes).