To get rid of moral hazardsin debt cancellations

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Moral hazard is the perverse effect of a party that has an incentive to take unusual risks because it does not bear the full costs of that risk. This is exactly the case with the complacent promises of debt cancellation to developing countries, encouraging corruption and irresponsible borrowing. In Europe, at a time when some are calling for the cancellation of national debts to the ECB, one must question the complex relations between debtors and creditors.

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