Reprofiling only works if it's negotiated for in accordance with the terms of the notes. It's not really a function of whether the US is reluctant or enthusiastic. It's up to the market under what terms it is willing to lend: will it lend if the notes provide for a subsequent reprofiling with majority consent of note holders or not? I can't see how the IMF refusing to lend money to a sovereign in trouble unless third party creditors agree to profiling is going to accomplish much unless the third party creditors are offered something in return. In essence this means the IMF would be negotiating a restructuring with the creditors and there could still be holdouts, depending on terms of the notes.



It also doesn't seem likely the markets would accept borrower courts. Very risky since so many of the courts have weaker judicial independence. The premium would increase considerably. Nor is it obvious that the results of such adjudication would be any less controversial; someone's going to lose.



Lastly, which governing law countries and their investors agree to doesn't have much to do with what currency you borrow in. You can agree to borrow Yen but have a NY-law governed contract.



I think on the whole Professor Rogoff overestimates policymakers borrow here: how would they steer international debt flows through the borrower's courts, for example? These are private contracts. Mess around and you'll just make rates higher or borrowing impossible.



T