Tag Archives: Sovereign debt

The Search for a Better Debt Instrument – by Mohamed Ariff

October 24, 2012

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In light of the ongoing financial crisis, and in particular the crisis surrounding sovereign debt, the question arises: “Is there an alternative sustainable model of debt-financing and debt repayment that could be the way forward?”. Professor Mohamed Ariff proposes an alternative method of debt-issuing and repayment that (i) prevents unlimited borrowings to build up beyond capacity to pay back, (ii) enables risk sharing in debt-based funding, (iii) provides debt forgiveness in extreme cases while (iv) makes the interest-on-interest practice illegal.

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