Innovative instruments

This category of the blog tackles issues related to instruments and contractual arrangements that expand and innovate on the standard contracts that make up most of the sovereign debt stock. Among other topics, we discuss:

  • Instruments that make repayment structures explicitly state-contingent, linking the bond payoff to relevant economic variables such as GDP growth, the price of certain commodities or exported goods, or natural events.
  • The challenges that need be addressed for the adoption of such instruments: reliability of the underlying statistics, standardization, and new pricing tools.
  • Contractual innovations aimed at facilitating the restructuring process.
  • The use of collateral and guarantees; collective debt issuances and risk-sharing arrangements within fiscal unions; “safe” asset provision schemes.
  • Instruments targeted to specific investors, with the aim of reinforcing some segments of the creditor base.
22 March 2021

Chile in the Wake of COVID-19: Adjustments to the Financing Strategy and Commitment to Climate Action

The COVID-19 pandemic roiled financial markets, triggering important capital outflows in emerging markets. This increased the financing challenges at a […]
19 November 2020

[DOCUMENT] IMF Staff Discussion Note on State-Contingent Instruments

On November 19, the IMF released a paper discussing state-contingent instruments. Those are instruments for which the debt service is […]