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Riccardo Barbieri Hermitte - European Commission Workshop: GDP-Linked Bonds - A proposal worth looking into

January 17, 2018 -  Mr. Riccardo Barbieri Hermitte, Director General of the Italian Ministry of Economic and Finance, prepared the attached policy brief for a workshop on GDP-Linked Bonds organized by the European Commission. He discusses how a recent survey of OECD sovereign debt managers revealed a good deal of skepticism vis-à-vis GDP-linked bonds (GLBs), with respect to both technical issues and perceived lack of investor interest. Issuers worry that weak demand for these securities would entail hefty risk premia, thus making these instruments too expensive. This policy brief, attached below, focuses on the aspects that are likely to determine the practical feasibility of GLBs, arguing that they would be a viable proposition if approached as a long-term initiative but clearly are not a near-term fix for high-debt countries.

Click HERE for the full policy brief or download a printable version below. 

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GDP-Linked Bonds: A Proposal Worth Looking into.pdf314.4 KB