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Sebastian Grund @sebgrund.bsky.social · 24/07/2026

Perhaps the most important finding: even where regulation exist, broad security exceptions often limit scrutiny by international bodies. With the rapid increase of (unilateral) financial sanctions, a review of the international economic governance framework may be warranted. 5/5

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Sebastian Grund @sebgrund.bsky.social · 24/07/2026

Against this backdrop, the paper develops a basic taxonomy of financial sanctions—from asset freezes and restrictions on financial services to SWIFT exclusions as well as capital market-related sanctions—and maps them across IMF law, GATS/GATT, and international investment law. 4/5

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Sebastian Grund @sebgrund.bsky.social · 24/07/2026

We show that international economic law generally provides much stronger protection for current payments and transfers than for capital movements. Thus, different financial sanctions can be subject to a different level of scrutiny and regulation under the IMF, WTO, and investment law regimes. 3/5

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Sebastian Grund @sebgrund.bsky.social · 24/07/2026

A core argument of the paper is that many debates about financial sanctions overlook the foundational distinction in international economic law between: ➡️ current account transactions ➡️ capital account movements That distinction has major consequences for how sanctions are regulated. 2/5

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Sebastian Grund @sebgrund.bsky.social · 24/07/2026

New Article in the Journal of International Economic Law (with Armin Steinbach): The “capital” and “current” account dimensions of financial sanctions. Financial sanctions have become a central tool of economic statecraft, but the international legal framework governing them is underexplored. 1/5

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Reposted by Sebastian Grund

Bruegel @bruegel.org · 21/05/2026

🚀 Leadership Announcement 🚀 We're thrilled to announce the appointment of Katharina Bergant and @tagliapietra.bsky.social as Bruegel’s new Deputy Directors. We’re excited for the insight, collaboration, and leadership they will bring to the organisation! 🔗 More information: buff.ly/tjIdybf

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

Finally, on litigation strategy, we posit that sovereign issuers need to be aware of how foreign courts assess actual and apparent authority to ensure legal certainty and avoid (ex-post) disputes as to the validity of sovereign debt. 14/end

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

With respect to contractual reform, clearer carve-outs regarding the applicability of domestic law to authorization issues seem sensible, as others have argued: scholarship.law.unc.edu/cgi/viewcont... 13/x

scholarship.law.unc.edu

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

Domestic reform is key, as IMF staff has argued. Many countries lack clear rules on what happens when debt is issued unlawfully. Without this clarity, foreign courts will find it difficult to assess whether an agent had actual authority or not. www.imf.org/en/Publicati... 12/x

imf.org

The Legal Foundations of Public Debt Transparency: Aligning the Law with Good Practices

Debt opacity burdens the public and can exacerbate debt vulnerabilities in many countries. Both low-income and developing countries and emerging market economies have critical gaps in debt transparenc...

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

Yet the case law paints a complicated picture, emphasizing the need for a multi-pronged approach to enhancing transparency: (i) Clear domestic laws on authorization & disclosure (ii) Contractual carve-outs for local law (iii) Litigation strategies that target actual authority 11/x

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

To this end, as others have argued, ultra vires principles can play some role in promoting debt transparency. If disclosure is a condition for authorization, then the validity of undisclosed debt may be challenged by the parties involved. www.clearygottlieb.com/-/media/file... 10/x

clearygottlieb.com

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

This dual-track framework when it comes to ultra vires sovereign debt—actual vs. apparent authority—creates both risk and flexibility. It protects the good-faithed creditor but, under certain circumstances, also gives sovereigns tools to challenge ultra vires debt. 9/x

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

In both jurisdictions, courts are reluctant to let sovereigns escape liability unless the creditor clearly knew—or should have known—that the debt was issued ultra vires. And even then, the sovereign may be confronted with non-contractual claims for repayment. 8/x

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

English courts, notably in Law Debenture v. Ukraine decided by the UK Supreme Court in 2023, distinguish between capacity (typically presumed for sovereigns) and authority (again differentiating between actual and ostensible authority). supremecourt.uk/uploads/uksc... 7/x

t.co

https://supremecourt.uk/uploads/uksc_2018_0191_0192_judgment_84af77fe39.pdf

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

In this vein, the 2024 PDVSA decision by the NY Court of Appeals clarified that the validity of sovereign securities is governed by the issuer’s domestic law, while the consequences of invalidity are governed by New York law. www.nycourts.gov/ctapps/Decis... 6/x

nycourts.gov

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

Apparent authority means the agent appeared to have authority, and creditors reasonably relied on that appearance. This is judged under the governing law—typically NY or English law. If an agent had (no actual but) apparent authority, the debt may still be valid/enforceable. 5/x

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

Actual authority focuses on whether the agent (e.g. finance minister) was legally empowered under domestic law to issue the debt. For this assessment, foreign courts tend to look to the issuer's domestic (constitutional) laws. 4/x

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

Ultra vires sovereign debt broadly means that the instrument was issued beyond a government’s legal powers. Courts in New York and England typically assess such debt and how it was issued through the prism of agency law: did the official have actual or apparent authority? 3/x

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

Many emerging and developing countries issue their debts under foreign law, which means that the instruments' validity and enforceability is decided by foreign courts. This raises the question as to how these courts look at flaws in the domestic debt authorization process (ultra vires). 2/x

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Sebastian Grund @sebgrund.bsky.social · 18/07/2025

🚨New paper alert: "Contested Authority: The Legal Framework for Ultra Vires Sovereign Debt and its Implications for Public Debt Transparency" (forthcoming in the Emory International Law Review). papers.ssrn.com/sol3/papers.... 1/x

papers.ssrn.com

The International Financial Architecture and Sovereign Debt Crisis Resolution

This chapter reviews the international financial architecture and its role in sovereign debt crisis resolution.<br><br>All debts are creatures of contract and s

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

13/ 🏁 Bottom line: The global debt architecture isn’t static. It shifts with politics, law, and market forces, like furniture that can be arranged and re-arranged. Constant evolution thus remains key to reduce the negative effects of sovereign debt crises. #SovereignDebt #Finance

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

🌱 12/ Climate-focused mechanisms—like debt-for-nature swaps & resilience bonds—could align financial relief with sustainability goals. The challenge? Balancing creditor interests with long-term climate action.

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

11/ 💰 State-contingent debt instruments (SCDIs)—linking contractual debt to a pre-defined variable—were revived and featured in recent restructurings (Zambia, Suriname, Sri Lanka). Whether and how they reshape the architecture is not clear yet: www.lazard.com/research-ins...

lazard.com

The 2020-2025 Sovereign Debt Crisis: What have we learnt and what lies ahead?

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

10/ 🤝 The G20 Common Framework was recently introduced to improve restructuring for low-income countries. While restructurings under the Framework initially faced delays, it has started to deliver by ensuring faster agreements: www.imf.org/en/Blogs/Art...

imf.org

Sovereign Debt Restructuring Process Is Improving Amid Cooperation and Reform

Agreements taking shape at a faster pace are reducing uncertainty for countries and investors

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

9/ 🏦 The IMF is central to the system. Most sovereign debt restructurings happen within IMF programs. If the member’s debt is assessed as unsustainable, the IMF is precluded from providing financing unless steps are taken to restore debt sustainability, including through a debt restructuring

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

8/ ⚖️ Legal frameworks, too, shape debt outcomes. Most sovereign debt is governed by New York or English law, giving these jurisdictions an outsized role in global restructurings. Equally, sovereign debt litigation and enforcement is concentrated in these two jurisdictions.

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

7/ 🛑 Holdout creditors remain a challenge in the restructuring of privately-held debt. CACs have helped by binding minority creditors to majority-approved deals, but they apply only to bonded debt, not loans or other credit instruments—leaving gaps in the system.

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

6/ 🏦 Over the past decades, the creditor landscape has changed significantly. The Paris Club and the London club coordinated official and commercial lenders, respectively. Today, China and other non-Paris Club lenders play a major role—reshaping the "furniture" of debt negotiations.

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

5/ 📉 Defaults hit the poorest hardest. Research shows they lead to higher poverty, falling GDP, declining life expectancy, and a 1.5% increase in infant mortality. A slow-moving system makes these crises worse.

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

4/ ⏳ Restructurings are often protracted. On average, it takes 7.9 years to reach a decisive deal that prevents re-default. The longer it takes, the higher the economic and social costs.

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

3/ 🔄 Over centuries, debt resolution has shifted from gunboat diplomacy to IMF-led restructuring, from unilateral defaults to collective action clauses (CACs). The system adapts, but problems remain.

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

2/🌍The global sovereign debt architecture isn’t a rigid structure—it’s more like furniture. Pieces are moved, reassembled, and replaced over time to fit the political and financial landscape. Unlike corporate debt, sovereign debt has no bankruptcy court.

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Sebastian Grund @sebgrund.bsky.social · 08/02/2025

1/ 📢New paper alert: "The International Financial Architecture and Sovereign Debt Crisis Resolution" by @clemensgvl.bsky.social, Juan Farah Yacoub and myself: papers.ssrn.com/sol3/papers..... Short 🧵👇

papers.ssrn.com

Page Cannot be Found

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Sebastian Grund @sebgrund.bsky.social · 28/11/2024

Thanks, @tealemery.bsky.social, appreciate it. Impressive to see what the WB has done in the data space!

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Sebastian Grund @sebgrund.bsky.social · 27/11/2024

Great paper by @sandertordoir.bsky.social and @lscazzieri.bsky.social on the options for common EU defence spending. Grateful for the shout-out to A. Steinbach's and my paper on "EU debt financing" which looks at the legal leeway to issue joint EU debt: www.bruegel.org/working-pape...

bruegel.org

European Union debt financing: leeway and barriers from a legal perspective

The paper investigates the legal feasibility of the EU borrowing on the capital market to finance European public goods.

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Sebastian Grund @sebgrund.bsky.social · 27/11/2024

An overview of the (relatively technical) reforms can be found in this Table 1. There are no fundamental changes to the policy, but the tweaks are important to ensure that the Fund communicates transparently and timely in a more interconnected and shock-prone world. /end

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Sebastian Grund @sebgrund.bsky.social · 27/11/2024

The 2024 TP reforms seek to further strengthen the policy to essentially (i) support faster publication of board documents and communications of Board’s decisions and (ii) strengthen the rules and processes to modify Board documents prior to publication.

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Sebastian Grund @sebgrund.bsky.social · 27/11/2024

Moreover, and crucially, the policy protects staff independence and candor by limiting the modifications that the Board can make to IMF documents to very narrow categories. This also protects the integrity of the Board’s deliberations by avoiding negotiations of staff's analysis.

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Sebastian Grund @sebgrund.bsky.social · 27/11/2024

The TP was introduced in the 90s to make the IMF's operations more transparent. Gradually, the Fund moved to a model where almost all of its country (mainly Article IV, Use-of-Fund Resources) and policy papers are published.

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Sebastian Grund @sebgrund.bsky.social · 27/11/2024

My first post is on a seemingly dull and procedural but practically highly important IMF policy that I worked on for the last year: the "Transparency Policy" (TP), which was reformed for the first time in more than a decade. A very brief overview. www.imf.org/en/Publicati...

t.co

https://www.imf.org/en/Publications/Policy-Papers/Issues/2024/11/25/2024-Review-Of-The-Funds-Transparency-Policy-And-Open-Archives-Policy-558810

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Sebastian Grund @sebgrund.bsky.social · 27/11/2024

Hello @bsky.app -- I hope that this platform succeeds in re-building the online forum for honest debates on the big and small things shaping our lives that Twitter once was. Here in a personal capacity, mainly to learn from the many smart people and friends that moved here.

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