"In fact, Third World debts could be cancelled with little or no cost to anyone. Indeed, cancellation would be not only the simplest process imaginable, but to the general advantage of the world economy. All that is involved is a bit of creative accountancy - something at which the West has shown itself highly adept when this has suited its political purpose."
Michael Rowbotham goes on to present two possible "solutions":
1. Allow commercial banks to have fewer assets than liabilities.
2. Allow commercial banks to write off loans to Third World countries, but pretend that the money is still owed to them by retaining the debt as assets.
There is a reason that assets must equal liabilities on a balance sheet. When the bank's creditors come to ask for their money back, if the actual value of the assets isn't enough to pay them all, they have been defrauded into lending the company money which it knew it could not repay. A run on a bank is only fatal if the bank's assets are worth less than its liabilities.
It is wrong to say there is no cost - for each pound written off, a pound is taken from somewhere else - either from bank shareholders (e.g. your pension), bank bondholders (your pension again), depositors (you), or the government (you, via higher taxes or reduced services). Accounting fraud simply delays the time when people realise that their money has been taken.
Enron was good at this sort of creative accountancy. Not a good example to follow.