WASHINGTON, Nov 27: The International Monetary Fund on Monday unveiled groundbreaking plans to develop an international system to allow troubled countries to file for bankruptcy protection when their debts become unsustainable.

IMF First Deputy Managing Director Anne Krueger said the plan would fill a “gaping hole” in the world’s financial system that offers troubled nations no formal bankruptcy mechanism.

The proposal would offer countries the type of bankruptcy protection enjoyed by companies in many countries but would take years to put in place, meaning there would be no benefit for nations like Argentina, which is fighting to avert the world’s biggest sovereign debt default.

The plan, to be discussed by the IMF’s board in December, would make the IMF the gatekeeper of the new bankruptcy system with the lender being arbiter of whether to grant nations a “stay” on their debts to negotiate an orderly restructuring.—Reuters