RECOGNIZING the threat of debt crises in destabilizing the international economy,
BELIEVING that international cooperation is necessary in securing a stable economic future and promoting free trade between states,
The World Assembly enacts the following:
Article I. Definitions
Section 1. Sovereign debt for the purposes of this resolution means any debt accrued by a government of a state owed to public or private entities, including any interest on such debt.
Section 2. Sovereign default for the purposes of this resolution means the inability of a government to meet its debt obligations within agreed-upon terms.
Section 3. Debt refinancing for the purposes of this resolution means the replacement of existing sovereign debt with new sovereign debt through the instruments of the World Assembly established in this resolution.
Section 4. Debt restructuring for the purposes of this resolution means the reduction and renegotiation of delinquent sovereign debt held by a state during financial distress, in order to facilitate financial recovery.
Article II. Financial Stability
Section 1. The International Financial Stability Fund (IFSF) is created to undertake the obligations set out within this article. The IFSF shall establish comprehensive rules for its operation and employ expert knowledge in carrying out its missions.
Section 2. To prevent a sovereign default, member states may petition the IFSF for debt refinancing in the form of IFSF loans at reasonable interest rates that provide the member state with enough funds to make debt payments, secure necessary imports and goods, and fund the necessary operation of the state.
Section 3. The IFSF has the authority to require certain conditions for the disbursement of loans, including structural adjustments to the member states fiscal and monetary systems, to ensure the high likelihood of the loans being repaid on time and promote economic health and international trade.
Section 4. Member states may also petition the IFSF for advisory services on fiscal and monetary policy, which shall be given to promote international trade and economic cooperation. Member states may also petition the IFSF for advisory services in debt restructuring negotiations.
Section 5. The IFSF shall be funded by participating member states and voluntary donations. Member states who finance IFSF loans shall be repaid from the principle and interest collected, in proportion to their share.
Article III. Member State Responsibilities
Section 1. All member states are encouraged to participate in the IFSF, and employ fiscal and monetary policy that improves international economic health and promotes international trade.
Section 2. No member state or private entity shall prevent the IFSF from delivering funds for the repayment of their financed loans as part of the IFSF debt refinancing program.
Section 3. No member state shall unilaterally absolve itself of its sovereign debt.