Odd Lots What the Coronavirus Means for Pandemic Bonds
Feb 17, 2020
Olga Jonas, an economist at the Harvard Global Health Institute and former World Bank expert on pandemics, discusses the innovative yet controversial concept of pandemic bonds. She explores how these bonds, aimed at transferring financial risks of global outbreaks to investors, often struggle to provide timely payouts. Jonas highlights their shortcomings, particularly during the coronavirus crisis, pointing out that funds intended to aid lower-income countries disproportionately benefit wealthier investors. Her insights reveal critical lessons for future pandemic preparedness and public-private partnerships.
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Pandemic Risk
- Olga Jonas, a macroeconomist, became interested in pandemic risk while working at the World Bank during the avian influenza outbreak.
- She realized the world's lack of preparedness for pandemics, especially in poorer countries.
Pandemic Bond Triggers
- Pandemic bonds have complex triggers based on factors like time since the outbreak, number of deaths, and geographic spread.
- These triggers are often criticized for being too late to effectively contain outbreaks, as early intervention is crucial.
Bond Payout Process
- Current pandemic bonds require a 12-week waiting period and deaths outside the initial outbreak country before payout.
- A verification agent uses a complex 386-page prospectus to determine if the payout triggers have been met.