Loading ...The ECB Is Playing A Dangerous Game With “Collective Action Clauses” On Bonds
But firstly, what is a collective action clause (CAC)? To put it simply, it’s a mechanism whereby a bond’s value can be legally reduced by the issuer in times of hardship, originally very unpopular (in the ’80s and ’90s). Geoffrey Okamoto and others at the IMF and at central banks say that countries that were not allowed to do this to issued bonds experienced stagnation.
https://www.zerohedge.com/markets/ecb-playing-dangerous-game-collective-action-clauses-bonds