Editing Holdout problem (section)

==European Stability Mechanism==

The [[European Stability Mechanism]] (ESM) has been installed in order to help out countries of the [[Eurozone]] in financial distress. In case of an ESM-approved sovereign debt restructuring, the Holdout problem might play a significant role. Following amendments to the ESM could reduce this problem:<ref>Lee C. Buchheit, G. Mitu Gulati, Ignacio Tirado (2013): The Problem of Holdout Creditors in Eurozone Sovereign Debt Restructurings, p. 8-9</ref>

* Ensuring that the financial support being provided by the ESM to one of its members is not diverted to the repayment of an existing debt obligation of that member that was eligible to participate in a debt restructuring but declined to do so
* Assisting the beneficiary member state in any ESM-approved restructuring of its debt by deflating the expectations of prospective holdouts that they will be able to extract a preferential recovery through the pursuit of legal remedies after the restructuring closes
* Providing a safe harbor in the [[Eurozone]] for the recipient state to hold its assets and conduct its financial affairs without fear of harassment by holdout creditors