More work needed to make case for GDP-linked bonds – BoE paper
Design of GDP-linked bonds needs to align macroeconomic need with investor demand
GDP-linked bonds can help countries deal with heavy debt burdens and swings in growth, but more work is needed before they can become a workable reality, according to a paper authored by Bank of England (BoE) staff, with contributions from the Bank of Canada and the Central Bank of Argentina.
Although some countries have issued bonds that pay a higher coupon when GDP exceeds a certain threshold (so-called GDP warrants), no sovereign has yet issued a GDP-linked bond with full risk sharing between
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