Tokyo, Japan, October 14, 2012 —

Statement by the Co-Chairmen on behalf of the Group of Trustees

• Mr. Agustín Guillermo Carstens, Governor, Banco de México
• Mr. Zhou Xiaochuan, Governor, People’s Bank of China
• Mr. Toshihiko Fukui, President, the Canon Institute for Global Studies and Former Governor of the Bank of Japan
• Mr. Christian Noyer, Governor, Banque de France

Members of the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring (adopted in 2004) meet once a year to review the progress being made on the implementation of the Principles within the framework of the international financial architecture.

The Trustees took note of the comprehensive report provided to them by the Principles Consultative Group (PCG), which includes senior officials from emerging and mature market economies as well as senior bankers and investors, and welcomed the PCG’s effectiveness in providing feedback to a range of authorities and private creditors over the past 12 months on the implementation of the Principles, policy options and adjustment needs. The Trustees at their meeting noted the weakening global economic recovery and the persistence of downside risks stemming in part from the continuing Euro Area sovereign debt crisis. The slow growth and risk factors in mature economies and the ongoing bank deleveraging process have contributed to volatile net private capital flows to emerging markets. The Trustees welcomed the new policy initiatives adopted by Euro Area authorities and institutions to address concerns in sovereign debt markets and strengthen the Euro Area banking system.

Given this worrying backdrop, the Trustees reaffirmed their confidence in the value of the Principles, which incorporate voluntary, market-based, flexible guidelines for the behavior of sovereign debtors and private creditors with a view to promoting and maintaining stable private capital flows and supporting financial stability and sustainable growth. They welcomed the successful completion of the voluntary debt exchange agreement for Greece and for St. Kitts and Nevis reached through good-faith negotiations with private creditors consistent with the Principles. However, some aspects of the process through which the actual Greek debt exchange deal was reached and some specific features of the coverage and terms of the deal have raised concerns going forward. The Trustees noted in particular that the historic debt exchange for Greece, the first voluntary pre-default debt restructuring in mature economies, has demonstrated and underscored the validity and usefulness of resolving even the most difficult sovereign debt problems in a manner consistent with the cooperative, market-based guidelines established by the Principles with major benefits not only for the parties directly involved, but also for the Euro Area as a whole and global financial stability in general.

In this context, the Trustees strongly welcomed the overall findings and recommendations of the Joint Public-Private Committee on the Strengthening of the Framework for Sovereign Debt Crisis Prevention and Resolution, set up in March 2012 to assess the recent experience with sovereign debt crisis prevention, management and resolution in the Euro Area and elsewhere, draw appropriate lessons, and make recommendations on the strengthening of the existing framework for sovereign debt crisis prevention and resolution as embodied in the guidelines of the Principles. The Trustees endorsed the Joint Committee’s recommendations, summarized in an Addendum to the Principles, as a very useful amplification of the practical guidance for the effective implementation of the Principles in the evolving international financial system.

The Trustees welcomed the confirmation by the Joint Committee’s overall assessment that the Principles remain an appropriate, relevant and effective framework for sovereign debt crisis prevention and resolution. Their fundamental emphasis on sound policies and data and policy transparency by debtors is of critical importance in crisis prevention. Moreover, the underlying guidelines for voluntary, cooperative, market-based procedures for debtor-creditor dialogue and good-faith debt restructuring negotiations remain an essential cornerstone of sovereign debt crisis management and resolution and should continue to guide the interaction between sovereign issuers and their creditors. Such a cooperative approach would facilitate an early restoration of market access, which is of critical importance in achieving debt sustainability over time.

The Trustees further noted that since the adoption of the Principles in 2004, a growing number of sovereign borrowers have recognized the importance of active investor relations programs and strong data dissemination practices as tools to strengthen their relationship with the investor community and invited other financially integrated economies to consider benefiting from such programs. Especially in times of increased market stress, the Trustees emphasized that it is critical not to overlook the importance of the crisis prevention aspect of the Principles.

Mr. Agustín Carstens, Governor of Banco de México, stated that “the Principles were truly visionary: initially envisaged for emerging market economies, the Principles proved useful as a guiding framework for the good-faith negotiations for the voluntary Greek debt exchange, the largest debt exchange in history, involving both bonds and loans and a broad range of domestic and international investors. In this regard, the Principles have contributed and continue to provide tremendous value in safeguarding global financial stability.”

Mr. Christian Noyer, Governor of the Banque de France, pointed out that “the Joint Committee has provided a great service to the international community in distilling salient lessons from the recent experience in the Euro Area, and for making recommendations for ways to enhance both crisis prevention and the effectiveness of the cooperative, marked-based, voluntary approach to debt crisis resolution through good-faith negotiations, as encouraged by the Principles.”

Mr. Toshihiko Fukui, President of the Canon Institute for Global Studies and former Governor of the Bank of Japan, stated that “the Principles remained a useful framework for crisis prevention and resolution among emerging market sovereign issuers who continue to make major strides in enhancing their investor relations and data transparency practices.”

The Trustees welcomed Mr. Christian Noyer as Co-Chair of the Group of Trustees as a valuable addition to the leadership of the Group. They also thanked the four Co-Chairs of the Joint Committee—Mr. Jean Lemierre, Senior Advisor to the Chairman, BNP Paribas; Ambassador David Mulford, Vice Chairman International, Credit Suisse Group; Mr. Thomas Wieser, Chairman of the European Union’s Economic and Financial Committee, and President of the Eurogroup Working Group; and Mr. Gerardo Rodríguez Regordosa, Undersecretary of Finance and Public Credit, Government of Mexico—and the distinguished other members of the Committee for their effective and valuable service.