By Hicbd
Fri Oct 23 2020 7:14 pm
"This instrument is an insurance contract. If everything goes well and no pandemic occurs, they act as normal bonds. Investors provide capital to the World Bank, earn a pre-determined return each year, and when the instrument matures, the World Bank returns the principal. In the event of a pandemic that meets certain criteria, instead of repaying the principal to investors, the World Bank gains control of some or all of the funds, and disburses it to the affected countries to help deal with the outbreak (or replenishes their own reserves, having already disbursed funding)."
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