They are still relatively small on the scale of all international trade. This article talks about a $44bn debt. And a bankruptcy court does not have to write o

They are still relatively small on the scale of all international trade. This article talks about a $44bn debt. And a bankruptcy court does not have to write off debts entirely; it could force new interest rate agreements, fractional haircuts, etc. I think the bigger question is really if people want such a system or not: would the EU be willing to put tariffs on Chinese goods because they were refusing to restructure Argentinian debt? Would China ever sign on to such an agreement? I do not think they would, but the issue is not that such a system is impossible, it is that people have to want it and be willing to stake something larger as collateral (i.e. trade) in the first place.