A bankruptcy regime is an essential element of all national domestic financial systems. It is essential for reasons of fairness, and of systemic stability. However there is presently no bankruptcy regime for nations. The international financial system is experiencing increasingly frequent, and severe, financial crises. Presently the only options available to the IMF in dealing with a nation without the capacity to service its debt are to permit a destabilising and destructive default, as with Argentina in 2001; or to undertake a massive bail-out, as in East Asia in 1997. Such bail-outs pose their own systemic problems, and these two policy options are inadequate. An alternative to default or bail-out is needed, and that alternative is bankruptcy.