BoE paper proposes new sovereign debt instruments


A financial stability paper, published by the Bank of England yesterday, proposes two new sovereign debt instruments to boost liquidity and solvency in times of crisis.

In Sovereign Default and State-Contingent Debt, Martin Brooke, Alex Pienkowski, Rhys Mendes and Eric Santor say that recent efforts to resolve sovereign debt crises in Greece, Ireland, Portugal and Cyprus have exposed an "overreliance on official sector liquidity support".

The authors argue that private creditors should "play a

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