Republic of Texas Bonds

           Governments are usually able to borrow on terms at least as favorable as any available to individuals or companies. So long as they are not too indebted, their ability to tax subjects is something creditors are quite often happy to lend against. In the 19th century, numerous countries began to issue longer-term debts in bond

The People’s Budget

           Advocates of free trade have often promised it would bring more productive industry, the curtailment of monopolies, and more choice for consumers. However, free trade required a rethink of fiscal systems since, at least prior to the 20th century, most national governments relied on customs duties for a substantial part of their revenues. Those who

The Ottoman Debt Crisis

           When sovereign debt markets globally became more integrated in the 19th century, weaker debtors found a new way to finance deficits, borrowing from abroad. No longer would expedients to budget shortfalls, prudent or not, need to be found domestically. The advances of the 19th century enabled new borrowers to issue bonds to yield-hungry investors in

America’s Foreign-Currency Bonds

           Developing countries and smaller developed country governments often issue bonds in other currencies than their own. This allows investors to separate out the credit risk from the currency, inflation, and interest-rate risk of a particular country. An investor in developing country ‘hard-currency’ bonds, for example, can buy such bonds to take a view of the

Britain’s Sinking Fund

           In the late-18th century, Britain was awash in debt. So large was this debt that even relatively cheap financing couldn’t save the British government from interest costs that ate up half of state revenues. To pay down this debt, the country implemented a sinking fund, a fund established to repurchase bonds that had previously been

Venice’s Fiscal Restructurings

           Financial innovations are frequently born of necessity and this is true in public finance just as much as in corporate finance, banking, and beyond. It is often when the public finances are in the most dire shape that creative thinking is most needed. Sometimes, the solutions conjured up set governments on the right course. Though

Paying the Hoplites

           Many industrial and technological advances owe their existence to war and the same is true for financial innovation. In late-17th century England, a financial revolution was triggered in part due to a large European war then underway. The need to fund wars sparked financial ingenuity in more ancient times too. The city-states of classical Greece

Khedives, Canals, Cotton, and Credit

           In the 19th century, control over Egypt fell into the hands of rulers bearing grand ambitions for their country. However, ambitions are expensive and debts mounted as money was poured into new infrastructure projects, most notably the Suez Canal. Egypt was first introduced to the international debt markets while its economy boomed amidst rising prices

The Troika of 1898

           From 2009 to 2015, a troika of organizations were involved in arranging the bailouts of several countries, most notably that of Greece. These entities, the European Commission, European Central Bank, and International Monetary Fund, not only lent money to nearly bankrupt sovereign governments but also made aid contingent on policy changes in the rescued countries. The arrangement

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