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The recent COVID-19 outbreak has rocked the world in recent weeks. Beginning in Asia, a virus has rapidly spread across the world. It’s characteristic of affecting societies most vulnerable and lengthy incubation time has made it difficult to contain. As many nations make drastic measures to prevent the spread of the virus, a lot of damage has already been done.
The financial world has been turned upside down. Many markets have plummeted, leading some to think that another recession may be on the horizon. In the US, the federal reserve system has taken serious action, such as cutting rates, in order to aid the economy.
Things seem to be out of control now, but markets will most probably have a bull run as soon as the spread of the virus decrease. It means it’s time to buy as prices are low. Have we ever been in a situation like this before? Are there any financial instruments in place with a situation like this in mind? There is and it’s called the Global Pandemic bond.
In 2014, there was a widespread Ebola outbreak in West Africa. This outbreak was terrible due to the aggressive nature of Ebola but it was worsened by a slow global response to the problem. This response was inadequate and slow due to problems with funding. This lead to the world bank creating the global “pandemic bond.” The bond is intended to be a security blanket that can easily be deployed where it’s needed during a “health crisis.” The amount of money given is scaled based on the size and rate of spread of an outbreak.
The pandemic bond covers the spread of Coronaviruses, like the COVID-19 virus that is currently spreading. Hopefully, the bond can help the current outbreak. During these times, we hope you all make smart decisions and stay safe!
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