This Essay examines the intersection between two key attributes of sovereign debt governance in the Euro Area. First, sovereigns mostly issue bonds governed by their own law. This “local law advantage” should make debt restructuring comparatively easy, for the sovereign can change the law to reduce its debt. The second attribute is the so-called Euro CAC, a contractbased restructuring mechanism mandated by the Treaty Establishing the European Stability Mechanism (ESM). Euro CACs let a bondholder supermajority approve a restructuring and bind dissenters. Since 2013, nearly all Euro Area sovereign debt has included the clause. Many believe the ESM Treaty requires governments to use the Euro CAC to restructure. But if so, the Treaty is a suicide pact, for the design of the Euro CAC is flawed. In a meaningful subset of cases, the clause will not provide adequate debt relief. This Essay makes two primary contributions. First, using an Italian restructuring as an example, it explains why the ESM Treaty does not, in fact, require the use of the Euro CAC. Second, it examines the legal constraints—the most pertinent of which derive from the European Convention on Human Rights—that do restrict the use of local law advantage.

中文翻译：

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重组欧元区主权债务：选择范围缩小了吗？

本文探讨了欧元区主权债务治理的两个关键属性之间的交集。首先，主权国家发行的债券大多受其本国法律管辖。这种“地方法律优势”应该使债务重组相对容易，因为主权国家可以修改法律以减少债务。第二个属性是所谓的Euro CAC，这是《建立欧洲稳定机制条约》（ESM）规定的基于合同的重组机制。欧元CAC允许债券持有人占多数，批准重组并约束持不同政见者。自2013年以来，几乎所有欧元区主权债务都包含了该条款。许多人认为，《 ESM条约》要求政府使用欧元CAC进行重组。但是，如果这样的话，该条约是一项自杀协议，因为欧洲CAC的设计存在缺陷。在有意义的情况下，该条款将无法提供足够的债务减免。这篇论文有两个主要贡献。首先，以意大利的重组为例，它解释了为什么《 ESM条约》实际上并不需要使用欧元CAC。其次，它研究了法律约束条件，其中最相关的是《欧洲人权公约》，这些约束条件确实限制了当地法律优势的使用。