The called for large-scale reduction of the debt owed by poorer nations, the exchange of old loans for new low-interest loans, and the making of debt instruments that would be tradable on world financial markets.

Question:

The called for large-scale reduction of the debt owed by poorer nations, the exchange of old loans for new low-interest loans, and the making of debt instruments that would be tradable on world financial markets.

A) Brady Plan

B) Louvre Accord

C) Bretton Woods Agreement

D) Smithsonian Agreement                            

Answer

The Correct Answer is A

Explanation:

The program, known as the Brady Plan, called for the U.S. and multilateral lending agencies, such as the International Monetary Fund (IMF) and the World Bank, to cooperate with commercial bank creditors in restructuring and reducing the debt of those developing countries that were pursuing structural adjustments and economic programs supported by these agencies. The process of creating Brady bonds involved converting defaulted loans into bonds with U.S. Treasury zero-coupon bonds as collateral.

Brady bonds were named for Nicholas Brady, the former U.S. Treasury Secretary—under Presidents Ronald Reagan and George H. W. Bush—who led the effort to restructure emerging market debt.

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