Paris Club

AAA

DEFINITION of 'Paris Club'

An informal group of creditor nations whose objective is to find workable solutions to payment problems faced by debtor nations. The Paris Club has 19 permanent members, including most of the western European and Scandinavian nations, the United States of America, the United Kingdom and Japan. The Paris Club stresses the informal nature of its existence and deems itself a "non-institution." As an informal group, it has no official statutes and no formal inception date, although its first meeting with a debtor nation was in 1956, with Argentina.

INVESTOPEDIA EXPLAINS 'Paris Club'

The members of the Paris Club meet each month in the French capital, except for the months of February and August. These monthly meetings may also include negotiations with one or more debtor countries that have met the Club's pre-conditions for debt negotiation. The main conditions a debtor nation has to meet are that it should have a demonstrated need for debt relief and should be committed to implementing economic reform, which in effect means that it must already have a current program with the International Monetary Fund (IMF) supported by a conditional arrangement.

The Paris Club has five key functioning principles: case by case, consensus, conditionality, solidarity and comparability of treatment.

RELATED TERMS
  1. Sovereign Debt

    Bonds issued by a national government in a foreign currency, ...
  2. Sovereign Default

    A failure on the repayment of a county's government debts. Countries ...
  3. Creditor

    An entity (person or institution) that extends credit by giving ...
  4. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  5. Emerging Market Economy

    A nation's economy that is progressing toward becoming advanced, ...
  6. Global Recession

    An extended period of economic decline around the world. The ...
RELATED FAQS
  1. How do externalities affect equilibrium and create market failure?

    The International Monetary Fund (IMF) was created in 1945 and is governed by and accountable to its 188 member countries. ... Read Full Answer >>
  2. What are the typical day-to-day responsibilities of a Chief Operating Officer (COO)?

    A country's debt crisis affects the world through a loss of investor confidence and systemic financial instability. A country's ... Read Full Answer >>
  3. What are the pros and cons of operating on a balanced-budget?

    Few issues are more complicated, contentious and controversial in contemporary American politics than balancing the federal ... Read Full Answer >>
  4. What is the purpose of the International Monetary Fund?

    The stated goals of the International Monetary Fund include offering policy advice to member governments and central banks; ... Read Full Answer >>
  5. What types of assets and payments are recorded in the capital account?

    In terms of international trade and the balance of payments, the term "capital account" means different things in different ... Read Full Answer >>
  6. Who sets the global standard to stop money laundering and how is it implemented?

    The Financial Action Task Force (FATF) sets the international standard for fighting money laundering. Formed in 1989 by leaders ... Read Full Answer >>
Related Articles
  1. Credit & Loans

    How Countries Deal With Debt

    For many emerging economies, issuing sovereign debt is the only way to raise funds, but things can go sour quickly.
  2. Bonds & Fixed Income

    The Risks Of Sovereign Bonds

    Sovereign debt can play an important role in providing international diversification to individual investors.
  3. Fundamental Analysis

    An Introduction To The International Monetary Fund (IMF)

    Chances are you've heard of the IMF. But what does it do, and why is it so controversial?
  4. Economics

    What Is An Emerging Market Economy?

    Emerging markets provide new investment opportunities, but there are risks - both to residents and foreign investors.
  5. Personal Finance

    What Is The Bank For International Settlements?

    Get the scoop on the structure and functions of the oldest global financial institution.
  6. Economics

    What is the International Monetary Fund?

    The International Monetary Fund fosters global monetary cooperation and sustainable economic growth.
  7. Forex

    The Gold Standard Versus Fiat Currency

    What do "gold standard" and "fiat system" mean for currencies and economies? Investopedia explores the history of the gold standard and the rise of fiat.
  8. Economics

    Would More Government Debt Help The U.S. Economy?

    Many economic policy experts are once again asking: “What, if anything, can be done to accelerate the United States’ persistently soft recovery?”
  9. Economics

    Post-Election Opportunities For Nigerian Oil

    Nigeria has an historic opportunity to reform and improve its oil industry now that elections are over.
  10. Economics

    Could Ukraine's Debt Crisis Destabilize The EU?

    A financial crisis in Ukraine could be a bigger threat to European security than the current financial crisis in Greece.

You May Also Like

Hot Definitions
  1. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  2. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  3. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  4. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
Trading Center