Revolutionizing Sovereign Finance: Could Equity Replace Debt in Global Markets?
Sovereign finance is facing challenges like debt crises in Europe and Argentina's default. The article explores the idea of sovereign equity as a solution to these problems. Unlike companies, governments don't issue stocks, so they rely on bonds for funding. But bonds must be repaid with fixed interest, limiting options. Some countries have started issuing GDP-linked securities, tying interest payments to their economic growth. This innovation could help countries manage debt crises better.