The Us Treasury said Tuesday the time for debating how to work out sovereign bankruptcies was over and made a proposal that could eventually lead to restructuring clauses being included in most bond issues for emerging economies.

The plan, unveiled by Us Treasury Under secretary John Taylor, uses both a stick and a carrot approach and would add extra hurdles for nations needing aid and some windfall profits for bond investors.

"There has been much useful study and discussion since the mid-1990s when problems with the process became apparent," Taylor said at the Institute of International Economics. "But the time for study and discussion of options should be ending. The time for reform is really here."

The notion that there should be a formal set of rules for dealing with nations that default on their debts like Argentina has gathered steam

in recent months. Most countries offer bankruptcy protection for corporations in trouble but no such luxury exists for countries facing financial meltdown.

The increased debate was prodded in no small part by Argentina's spectacular economic implosion, which has left Buenos Aires grappling with having to restructure its $141 billion debt stock with no established rule book to play from.

In recent months Taylor has been promoting a market-based solution to the problem that would see countries include collective action clauses in their bonds which would detail how a restructuring would proceed if needed.

The IMF has also been active in the debate, proposing a more structured procedure whereby the IMF would adjudicate whether to grant a country a stay on its debts. Under the IMF plan a committee of creditors would then assemble with a new international body put in place to resolve disputes.