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Sovereign GDP-linked bonds

James Benford (), Mark Joy and Mark Kruger ()
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James Benford: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH

No 39, Bank of England Financial Stability Papers from Bank of England

Abstract: While the idea of governments issuing financial instruments whose repayments are indexed to gross domestic product (GDP) is not new, the current global backdrop of high sovereign debt coupled with low interest rates and weak and uncertain nominal growth prospects suggests the case for doing so may be especially strong now. This paper discusses the pros and cons of GDP-linked bonds, looks at when it might be most beneficial to issue, how investors might benefit, and possible ways of addressing the first-mover problem. The aim of this paper is to stimulate debate rather than provide answers.

Keywords: Sovereign debt; sovereign default; fiscal policy; debt management; GDP-linked bonds (search for similar items in EconPapers)
JEL-codes: E62 F34 G12 G13 G15 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2016-09-21
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (10) Track citations by RSS feed

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