Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Paris Club

What it is:

The Paris Club is slang for 19 developed countries who meet in Paris to discuss issues with nations to which they have lent money.

How it works (Example):

The Paris Club has several members, including the United States, United Kingdom, Japan, Belgium, Canada, France, Germany, Italy, Netherlands, Sweden, Switzerland and Russia.

The group meets in Paris nearly every month. The meetings often involve negotiations with countries that want to borrow from some or all of the members, but they also involve discussions about how to handle countries that can't repay their debts. In many cases, the borrowing countries are already receiving aid from the International Monetary Fund and thus are subject to economic-reform requirements that ensure it will repay its debts.

Why it Matters:

The Paris Club is an unofficial group; it is not a government entity or a formal institution. In a way, the Paris Club is a manifestation of the microcosm of global lending and finance; that is, countries are able to conduct negotiations and problem-solving discussions that affect the economic policies, aid and governance of much of the world.