Diaspora Bonds: Patriotism or Profit? with G. Mitu Gulat

In the world of sovereign debt instruments, the Holy Grail of financial instruments is the GDP indexed bond. That is, a borrowing instrument that operates counter cyclically. The sovereign would make smaller payments to lenders when times were tough and higher ones during good times. If such products were to be widespread, the risk of sovereign financial crises would be ameliorated. However, years of research have so far yielded little success. The Israeli diaspora bonds program–while not fitting the conventional conception of a GDP indexed bond–might well have found the magic elixir. Spreads between Israeli diaspora bonds and conventional bonds suggest a countercyclical payment pattern. The Israeli program may be sui generis. But it also possible that its design contains clues as to how to design a successful countercyclical sovereign financing program.

Видео Diaspora Bonds: Patriotism or Profit? with G. Mitu Gulat канала Case Western Reserve University School of Law