What are the growth-linked bonds that Greece is proposing?

  • Exchange existing European rescue loans for new bonds linked to future GDP growth - Bosnia, Bulgaria, Costa Rica & Mexico have issued similar instruments in the past.
  • Downside protection for Greece - pay more to creditors when economy does well, and less when economy slows, so good risk-sharing solution.
  • But problem insofar as imply more flexibility from creditors (but better than outright default), and also might result in Greece fudging GDP numbers.

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