What is the public debt and how it is generated?
Why an economic system needs to grow?
How the monetary politics is changing the democratic structure of our society?
Which is the role that money have in building the relationship between people and institutions?
Answering this questions requires a deep analysis of the monetary system.
In this talk I will try to introduce the concept of debt from an historical prospective, describing which are the mechanisms used to generate it. I will also discuss how the debt is used in the modern society to force the implementation of specific policies against others. I will also underline how the economic theory called "neo-liberism" is structured as an ideological system.
1. Money as instrument of power in theMoney as instrument of power in the
modern financial-economic systemmodern financial-economic system
(english version)(english version)
Giovanni MorlinoGiovanni Morlino
MONEY AND POWERMONEY AND POWER
2. SUMMARY
●
Creation of Money in the modern Central Bank System
The issue of interest
The creation of debt: the public debt
How Central Banks work
The concept of growth
●
Money as instrument of Power
From the Great Depression in '29 to today
Why crisis happen
The new role of finance as an instrument of social control
Neoliberalism as an ideological system
3. Interest rate: a simple example
Which is the effect of an interest rate on the whole economic system?
€ €
Expenses
€
Gain
Gain
€ € € €
Assume a viable and close economic system
Calculate the wallet state for each individual as a
function of time:
Capital (t+1) = Capital(t) + Gain – Expenses
Role: if Capital < 0 → ask for a loan “P”
Let us assume an amortization of loan in 10 years:
Annual expenses for the loan Sa= P/10 + P*tasso
Total expenses after 10 years St= P*(1+tasso)
Exemple:
P = 10.000 €
Rate = 5%
→ Sa = 1000 + 50
→ St = 10.500 €
4. Each person start with the same initial
capital (10.000 €)
Individual gain and expenses are
calculated in a random way
C(0) = 10.000 €
C(t+1) = C(t) + G(t) – S(t)
Se C(t)<0 chiedo prestito al 5%
C(t+1) = C(t) + G(t) – S(t) - Sa
The amount of money
fluctuate in time
Total debt of the system: sum of all individual
debts at a fixed time:
D_Tot(t) = D(1,t) + D(2,t) + D(3,t) + ...
Interest rate: a simple example
5. Interest rate= 20%
Interest rate= 5%
Interest rate= 10%
Situation after 40 years,
appling policy of debt
repayment after the first 30
years.
Interest rate: a simple example
Distribution of money
after 40 years
Ammount of total debt
6. The debt cannot be payed off but it always grows
→ a system based on a positive interest rete is ALWAYS unstable
For this reason many past cultures considered loans with interest a fault or
even a crime
Growth of debt/capital
with an interest rate of 5%
What happened in the past?
In the past this problem was solved
cancelling the debt with a periodic
basis:
- giubileo (Christian church, every 25
years)
- sabbatic year (Jewish, every 7 years)
years
7. What happened in the past?
Debt crisis are present since the anchient history, namely since the
money was invented (i.e.~ VI-VII sec. A.C.) and they were faced in many
different ways, the most relevant being:
1 - EMIGRATION
2 - WARS
Generally they lead to the cancellation of debts with expropriation of
natural resources and/or loss of sovereignty
3 - PARTIAL OR TOTAL CANCELLATION OF THE DEBT
Often connected to religious cerimonies
4 - PUBLICIZING THE DEBT
The debt is converted from private to public.
This techinque was mainly used in the '30 - '70 after many countries were
converted in Republics.
→ This process practically involves the purchase of a bank from the State
(including the central banks)
→ in this way a fraction of the private debt becomes statal
→ if the State owns money to itself, the debt becomes a virtual concept
8. “I believe that banking institutions are more dangerous to our liberties than
standing armies. [...] The issuing power should be taken from the banks
and restored to the people, to whom it properly belongs.”
Thomas Jefferson, see "Jefferson's Opinion on the Constitutionality of a
National Bank, 1791.”
“All the perplexities, confusion and distress in America arise, not from
defects in their Constitution or Confederation, not from want of honor or
virtue, so much as from the downright ignorance of the nature of coin,
credit and circulation.”
John Adams, letter to Thomas Jefferson, August 25, 1787.
“It is well enough that people of the nation do not understand our banking
and monetary system, for if they did, I believe there would be a revolution
before tomorrow morning."
Henry Ford
THE MODERN BANK SYSTEM
9. Who issues the currency
today?
0,08
0,02
0,9
Bills
Coins
Scriptural
money
Scriptural money (or virtual money)
Issued by commercial banks as a consequence of
loan anked by citizens and companies.
This is the money wich produce tha major amount
of inflation.
Coins
Issued by the State
(Zecca di Stato)
But the amount is decided
by the BCE.
It does not produce debt
for the State
Bills
Issued by BCE in discretional
amount.
It is lend to other banks with
an interest rate called Offical
Discount Rate
10. THE MODERN BANK SYSTEM
BCEBCE
Basic monetary
reserve
Through the
mechanism of
fractional reserve,
banks multiply the
amount of money
circulating in the system
Ref. Modern Money
Mechanics
Total sum of money in
circulation.
Tot = R/F
The central bank provide the basic
monetary reserve (technically called M0
)
If the basic reserve is R= 1000 € and F = 10%
→ Tot = 1000 € /0.1= 10.000 €
M0
11. Who provides money to the
State?
BCEBCE
Commercial
banks
STATE
Treasury Bonds = Public Debt
Nowaday States cannot create their
own money (in past they could)
Basic monetary
reserve
The treasury bonds are sold at public
auction
12. Who provides money to the
State?
BCEBCE
Commercial
banks
STATE
Treasury Bonds = Public Debt
The treasury bonds are sold at public
auction
Basic monetary
reserve
Citizens
IMPORTANT: the exchange
of money between the State
and Citizens does not create
a real debt because it is
only a game turn.
Nowaday States cannot create their
own money (in past they could)
15. PUBLIC DEBT vs. PRIVATE DEBT
Debit/GDP
(year 2007)
PUBLIC DEBT PRIVAT DEBT TOTAL
ITALY 105% 49% 154%
GERMANY 66% 109% 175%
ENGLAND 42% 162% 204%
USA 70% 142% 212%
JAPAN 150% 136% 286%
For a correct evaluation of the economy of a single country one should
account for the sum of public + private debt.
Let us compare few countries (data from 2007, before the crisis):
WHY ITALY WAS CONSIDERED A COUNTRY WITH HIGHER RISKS
THAN OTHERS IN SPITE OF A SMALLER TOTAL DEBT?
16. WHO OWNS THE ITALIAN DEBT?
Nazionalità Tipologia giuridica Banche/Fondi
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
56,4%
43,6%
12,7%
87,3%
46,8%
53,2%
Fondi
Banche
Istituzioni
Famigie
Stranieri
Italiani
Sources:
- Elaborazione dati Banca d'Italia, Supplemento al bollettino statistico 14 ottobre 2011 n. 51;
- Morgan Stanley, “Who owns Italy's government debt?”
Foreigners
Italians
Institutions
Families
Founds
Banks
Data 2011
17. DISTRIBUTION OF THE
CENTRAL BANK SYSTEM
CENTRAL EUROPEAN BANK
National Shares in the capital Money invested
Central of BCE (in milions of €)
Banks (in percentage)
_______________________________________________________________
Deutsche Bundesbank 18,9 1.090
Bank of England 14,5 59
Banque de France 14,2 819
Banca d’Italia 12,5 719
Banco de España 8,3 478
De Nederlandsche Bank 4,0 229
Banque Nationale de Belgique 2,4 140
Banca di Grecia 2,0 113
Oesterreichische Nationalbank 1,9 112
Banco de Portugal 1,8 101
Finlands Bank 1,3 72
Central Bank and Financial
Services Authority of Ireland 1,1 64
CENTRAL EUROPEAN BANK
National Shares in the capital Money invested
Central of BCE (in milions of €)
Banks (in percentage)
_______________________________________________________________
Deutsche Bundesbank 18,9 1.090
Bank of England 14,5 59
Banque de France 14,2 819
Banca d’Italia 12,5 719
Banco de España 8,3 478
De Nederlandsche Bank 4,0 229
Banque Nationale de Belgique 2,4 140
Banca di Grecia 2,0 113
Oesterreichische Nationalbank 1,9 112
Banco de Portugal 1,8 101
Finlands Bank 1,3 72
Central Bank and Financial
Services Authority of Ireland 1,1 64
The BCE is in charge to print money, but who are the owners?
18. DISTRIBUTION OF THE
CENTRAL BANK SYSTEM
The BCE is in charge to print money, but who are the owners?
CENTRAL EUROPEAN BANK
National Shares in the capital Money invested
Central of BCE (in milions of €)
Banks (in percentage)
_______________________________________________________________
Deutsche Bundesbank 18,9 1.090
Bank of England 14,5 59
Banque de France 14,2 819
Banca d’Italia 12,5 719
Banco de España 8,3 478
De Nederlandsche Bank 4,0 229
Banque Nationale de Belgique 2,4 140
Banca di Grecia 2,0 113
Oesterreichische Nationalbank 1,9 112
Banco de Portugal 1,8 101
Finlands Bank 1,3 72
Central Bank and Financial
Services Authority of Ireland 1,1 64
CENTRAL EUROPEAN BANK
National Shares in the capital Money invested
Central of BCE (in milions of €)
Banks (in percentage)
_______________________________________________________________
Deutsche Bundesbank 18,9 1.090
Bank of England 14,5 59
Banque de France 14,2 819
Banca d’Italia 12,5 719
Banco de España 8,3 478
De Nederlandsche Bank 4,0 229
Banque Nationale de Belgique 2,4 140
Banca di Grecia 2,0 113
Oesterreichische Nationalbank 1,9 112
Banco de Portugal 1,8 101
Finlands Bank 1,3 72
Central Bank and Financial
Services Authority of Ireland 1,1 64
BANCA d'ITALIA
Participant Shares Votes
________________________________________________
Intesa Sanpaolo S.p.A. 30,3% 50
UniCredito Italiano S.p.A. 15,7% 50
Banco di Sicilia S.p.A. 6,3% 42
Assicurazioni Generali S.p.A. 6,3% 42
Cassa di Risparmio
in Bologna S.p.A. 6,2% 41
INPS 5,0% 34
Banca Carige S.p.A. 4,0% 27
Banca Nazionale del Lavoro 2,8% 21
Banca Monte dei Paschi di Siena 2,5% 19
Cassa di Risparmio
di Biella e Vercelli 2,1% 16
Cassa di Risparmio
di Parma e Piacenza 2,0% 16
BANCA d'ITALIA
Participant Shares Votes
________________________________________________
Intesa Sanpaolo S.p.A. 30,3% 50
UniCredito Italiano S.p.A. 15,7% 50
Banco di Sicilia S.p.A. 6,3% 42
Assicurazioni Generali S.p.A. 6,3% 42
Cassa di Risparmio
in Bologna S.p.A. 6,2% 41
INPS 5,0% 34
Banca Carige S.p.A. 4,0% 27
Banca Nazionale del Lavoro 2,8% 21
Banca Monte dei Paschi di Siena 2,5% 19
Cassa di Risparmio
di Biella e Vercelli 2,1% 16
Cassa di Risparmio
di Parma e Piacenza 2,0% 16
19. BANKITALIA S.P.A.
• This situation contravenes the provisions of art. 3 of the Statuto della Banca
d'Italia which, in the last paragraph reads: "... must be ensured the
permanence of the majority shareholding by public bodies or companies
whose majority of shares with voting rights are held by public bodies."
But because the Bank of Italy is independent, this situation cannot be
questioned by the Government.
• With the election of Mario Draghi as Governor of Bank of Italy, this article it
has been deleted.
• Bank of Italy by law must control the balance sheets of commercial banks
(supervision). But some doubt on its effectiveness arises because the
controllers and the controlled are indeed the same people.
The Bank of Italy is a public institution as defined by the Banking Act of 1936, also
confirmed by a judgment by the Suprema Corte di Cassazione.
The stakes in are the 94,33% owned by banks and private insurance companies
and for 5.67% by public institutions (INPS and INAIL).
20. Historic summary
• '30 The Great Depression
• '40 II World War II and the Bretton Woods agreements
• '50-'70 The end of colonialism and the beginning of neo-colonialism
• '70 The oil crisis: end of the Gold Standard system
• '80 Beginning of the liberal era
• '90 End of Communism and the beginning of Globalization
• 2000 Financialization of the economy and the Big Crisis (2008)
21. THE GREAT DEPRESSION
IN 1929
Short summary:
• Stock market of Wall Street crash
• The value of bank stocks collapse → assault to deposits
• Inability to financing companies
• Layoffs
• Reduction of the total expenditure of households
• Further reduction of businesses
• Reduction of exports and imports
• The crisis spreads to other countries (especially Europe)
Aftermath:
• Unemployment in USA reaches 25%, and the
industrial production drops by 50%
• In '31 England give up the Gold Standard
→ end of English domination of financial
system
• In the '34 the dollar and the british pound
suffer a strong inflation
22. Solving the Crisis
• Attempts to find an international agreement failed (both because the lack
of a leading country and of relevant international institutions)
• Countries imposed duties and push towards closed economies
• Strong role of the State to push economy:
• New Deal promoted by Roosevelt in USA
• (keynesian-fordist model: expansion of aggregate
demand and strong public investments)
• Foundation of IRI in Italy in the '33
(Institute for the Industrial Reconstruction)
• Many countries start to adopt typical war economies
• The Great Depression ended only with the beginning
of the WWII
THE GREAT DEPRESSION
IN 1929
23. Bretton Woods System:
1945-1972
'44–'46 Bretton Woods Agreements
Aim: rebuilding of countries destroied by the war and creation
of a new international monetary system able to guarantee the
price stability.
2 progects were presented:
• John Keynes (England): creation of a clearing house for
credit/debts and intruduction of a single currency for
international trade (BANCOR).
• Harry White (USA): system based on the US dollar for
international trade (the dollar is in turn based on gold):
fixed change rate between US dollar and other currecies.
The following institutes were founded:
• Bank for Development and Cooperation
(after called World Bank)
• International Monetary Found (IMF)
• GATT (agreement on Tariffs and Trade for the
•removal of customs duties) → today called WTO
24. '50-'70: from colonialism to
neo-colonialism
World Bank and IMF were turned into intruments suitable to realize the neo-
colonialism.
HOW DOES NEO-COLONIALISM WORK?
The neo-colonialism is based on the financial power, rather than on direct
violence, as happened in the past.
1) The developing countries are enticed to enter in the free-market with the
promise to reach the same welfare level of developed countries.
2) Counseling agencies make growth forecasts
3) The World Bank provides loans to support the country's economic growth
4) Growth is systematically below the expectations of forecasting models
5) The countries cannot repay debts
6) IMF enters the game providing new loans but only under specific conditions:
(market liberalization, sales of public assets, reduction of puclic services)
7) Once the market is open, western corporations are free to buy Countrys'
resources and businesses at very low prices
After the end of the colonialism era a problem araised for the western countries:
how to keep under control the resources of the former colonies.
25. '71: the end of Bretton Woods
system...
As a result of expenses incurred during the
Vietnam war, the US printed a significant
amount of dollars and the public debt grew
considerably leading to an inflation of the
Dollar.
Dollar inflation is aggravated by the
economic growth of Germany and Japan.
Some Countries, like France, demanded conversion of their dollar reserves into
gold.
1971: Nixon decides that dollars could not be converted into gold any more.
1971 Smithsonian Agreement: it puts an end to the Bretton Woods system which
was replaced by a system of flexible exchange rates between currencies. The dollar
is devalued slightly (but less than the forecasts).
Gold abandoned as international reserve
26. ...e birth of the petrodollar-
standard
The Dollar becomes the currency of international reference on a purely fiducial
basis.
The US achieved a huge advantage: get wealth in exchange of money which can be
printen in unlimited amounts.
The downside is that US have no longer a brake to the debt and in a few years it
turned from being the world's largest creditor to be the largest debtor (in the
80s).
The US economy is transformed from a production economy to an economy
based on income (financial), consumption and debt.
“The power of Dollar was manifested in
its purely hegemonic”
Guido Carli, governor of Banca d'Italia
WHY THE DOLLAR DOES NOT SUFFER A STRONG INFLATION?
27. 1973: the oil crisis
• USA support Israel during the October war in 1973
• The OPEC country reacted cutting the oil production and with an embargo of 5
months against the USA
• The oil price rose from 1,39$ (1970) to 8,32$ (1974)
After the embargo Washington begin to negotiate with the Saudis and in few
years an agreement is reached:
The United States undertake to
1) Unconditional support of the House of Saud, both political and military.
2) Provide businesses and technologies to transform Saudi Arabia into a modern
Country.
Saudis undertake to
1) Provide oil at stable prices
2) Investing dollars in US companies
3) Selling oil only in dollars
4) Buy US treasury bonds
With this agreement Saudi Arabia enters
the US imperial system
28. The dollar cycle:
the master-slave dinamics
FED
Treasury
bonds
dollari
Industrial and
agricultural
products
USA
becomes
a debtor
Japan
becomes a
creditor
Up to 1973 US are the major
world creditor
Starting from the '80 US turns
into the largest world debtor
29. The Neo-colonialism
and the US public debt
Source: United States Treasury department Office for Public Affairs – June 2007
Who owns the US debt?
30. 60s and 70s:
social battles and achievements
Following the success of Keynesian recipes, Western countries undergo a
huge increase in wealth and a remarkable reduction of the gap between rich
and poor.
The greater well-being of the poor promotes social conflict:
the 60s and the 70s saw a flourishing of mass movements seeking to obtain a
larger democratic participation, more social and civil rights.
Social conflicts reduced the power of ruling elites who sought remedy.
In 1975, the Trilateral Commission dedicates a conference to the "crisis of
democracy":
→ Identifies the responsibility of the crisis (economic and social) in the
higher wages obtained by the working classes
→ As a remedy it was proposed:
1) wage deflation
2) reduction of social spending
3) increasing the capitals' freedom
(in particular the free transfer between countries)
31. The 80s:
beginning of the liberal era
1981: Election of president R. Reagan (vice-president G. Bush)
(The Reagan Administration is tightly connected to the corporatocrazy)
At the World Bank McNamara was replaced by William Clausen.
The WB and the IMF policies drastically changed: liberal theory from the Chicago
school were applied rigorously.
(The principal economists where Milton Friedman and George Stigler)
R. Raegan in US and M. Thacher in England started the
process of deregulation:
the keynesian idea of an economy based on the State action
was abandoned; a new model is proposed where the State is
absent and the private businesses are supported, while any
constraints external to the Market need to be removed.
• Liberalizazion of international trades
• Liberalizazion of capital flows ('82-'98)
32. The “Washington consensus”
alias the “free market” system
The neoliberalism is a special form of capitalism (which is a theory of
accumulation) based on three foundamental pillars:
Austerity → reduction of public deficit
→ cut of social services
Privatizzation → transfer of state monopolies into private hands
Liberalizzation → open borders to foreign goods
→ encourage the inflow of foreign capitals
A corollary of this theory is the “trickle-down” effect:
“It is useless to take care of poverty, because the poorest gradually benefit as a
result of the increasing wealth of the richest.”...
The trickle-down effect has been empirically proven to be wrong.
NOTE: the mathematiclal model used to define the free market system is
extremely simplified and not applicable to any realistic situation
Typical recipe
proposed by
the IMF
33. The rule of IMF
1) The IMF provides loans to countries in crisis.
2) In return the IMF asks the Countries to apply literally neoliberal economic
recipes.
3) Sometimes the IMF even "suggest" the laws to be approved in parliament...
The IMF's power today is enormous: all countries will seek consensus, because his
approval of economic policies guarantee the access to funding from the World
Bank and from the markets in general.
The IMF is basically an undemocratic institution: the policies "imposed" to a
Country are never discussed with the Country itself, and often presented in total
secrecy.
After appling the IMF policies, almost all countries suffered severe economic
crises.
Over the past 25 years there have been about 100 economic crises !!!
Note: before the 2008 crisis the IMF recipes have never been applied to
rich western countries!
34. A simplified sckech of the
modern government system
IMF
WTO
World Trade Organization
Central
Banks
Commercial
banks
Business banks
(Goldman Sachs,
Leheman Brothers, etc.)
STOCK
EXCHANGE
GOVERNMENTS
Corporations
Fiscal paradise
Bilderberg group
Trilateral
commission
35. Government policies
The government action is carried out through the control of the financial
system.
Money is the main foundation of sovereignty (i.e. the possession of money
legitimates the exercise of power).
In this system everything that can be commercialized (namely quantified
in money) can be controlled.
Two major consequences:
→ The system tends to commodify everything possible
→ What is not commercialized is neglected (not because it can not be
profit, but rather because it can not be controlled)
Profit is the means, not the final purpose:
the ultimate goal of the liberal system (like the majority of systems)
is the social control.
36. Government instruments
The financial system can use different means to regulates relations
between countries and institutions and to excercise the social control.
The principal are:
1) Monetary policy (namely how money is created and distributed)
2) Speculative bubbles (use of money to transfer powers
and material goods)
3) Floating exchange system between currencies
4) Rating the counties economy through the rating agencies.
From this rating depends the percentage of interest on Treasury bonds and the
easiness to get money from the capitals' markets.
37. Political solutions to the
crisis
For people in charge it is very difficult to develop solutions to the crisis
that go beyond the frame of the neoliberal ideology.
The mandatory commandment of this ideology is the growth. In fact
politicians from almost all parties are invoking growth as a foundamental
pillar to solve the crisis (but there is no demonstration that this will work)
Approach of the Left parties
It calls for new rules to curb the destructive power of capitalism. There is
no alternative to the free market system, but only a more humane
capitalism.
Approach of the Right parties
Even if new roles are invoked, the liberal Right uses the crisis to
restructure the economic and social system in hierarchical way:
• Crushing the bottom (fragmentation of the social tissue)
• Centralizing the top (generating monopoles and reducing the
number of people in charge)
38. Building Europe through
the crisis
“From one hand we are reducing the power of States and public sector in
general through privatization and deregulation [...] On the other hand we
are transferring many of the powers of Nations in a more modern structure
at European level (i.e. the European Commission, author's note) that helps
international business like ours”.
Daniel Janssen
European Roundtable of Industrialists (ERT)
(member of the Trilateral Commission)
The European Commission is taking advantage of the instability caused by the
economic crisis to steal State budgets from the decisions of their legitimate
governments, and has embarked on a process that will lead to a massive
transfer of sovereignty [...] Fiscal policies are no longer in the hands of national
governments.
39. Neoliberism as ideology
As a general role in the human history, any power system needs to be
legitimate through the creation of an ideology.
In spite of the common belife that we are living now in a post-ideologic era,
we are rather living in the era of a single ideology.
Liberalism is presented as a natural theory of the market mechanisms.
Liberalism asserts the tendency of the market (the invisible hand) to
evolve spontaneously towards the most efficient state, which is the
"best world" for both the producers and the consumers. So, according to
liberalism the market system moves towards a situation of increasing
order.
Weak point: this ideology is purely immanent (without transcendence)
Afterwards the tendency is to say that all social areas may be treated as a
particular form of market.
40. The ideological
representation
Like many other ideological systems, Neoliberalism is a filter used to read
the reality.
An ideology is invasive by definition, since if it fails to interpret the reality,
it will probably be replaced by another form of ideology.
The development of ideologies has similarities with the evolution of a species
according to Darwinian principles and also with the evolution of scientific
theories.
Analogy with other systems of power: the case of the Christian religion.
Natural law ↔ Divine law
Invisible hand ↔ Providenz
Debt ↔ Sin
The money actually becomes the only symbolic generator of value
41. Why we need to growth?
As we have seen the debt can never be repaid, but increases exponentially,
up to produce a "brake" in the system.
In the framework of neoliberism, a single Country or a single company
have only one way to avoid the crisis and the failure: increase profits
beyond the level of the interest rate.
This is the origin of the need for growth as currently presented.
The growth, however, can not be a global and stable solution in the long
term because it cannot be applied simultaneously to the whole economic
system.
42. The Footprint concept: the World seen by its exploitation
(source WWF: Living Planet Report-2003)
Practical consequences of the
present economic system
43. Which alternatives?
“You will never change
things fighting the existing
reality.
To change something, build
a new model that makes
reality obsolete“
“You will never change
things fighting the existing
reality.
To change something, build
a new model that makes
reality obsolete“
(Buckminster Fuller)
44. Islamic finance
Islamic finance is based on interpretations of the Koran.
Its two central pillars are:
1) you can not get interest on loans and
2) you must make socially responsible investments.
In practice, when an Islamic bank lends money to an enterprise, the bank
becomes a shareholder. Hence, if the enterprise goes well than the bank will
take part of the profits. Conversely, if the company goes wrong and lose, the
bank also will lose part of the capital borrowed.
The Argentinian case
After the economic crisis in 2001, Argentina introduced a new type of bonds,
an equity-type warrants, which pay interest only if the GDP actually grew up
at the end of the year (while the capital is 100% guaranted).
The basic concept is similar to the one adopted by Islamic finance.
Which alternatives?