What the Coronavirus Outbreak Means for Pandemic Bonds

The video discusses the challenges of using catastrophe bonds for epidemics, highlighting issues with defining triggers due to high uncertainty. Unlike natural disasters, pandemics correlate with economic cycles, making them unsuitable for diversification. The World Bank's pandemic bonds face design flaws, and the real issue is not funding but preparedness. Alternatives focus on prioritizing and preparing institutions and countries for outbreaks.

What is a primary challenge in using catastrophe bonds for epidemics?

• Defining suitable triggers

• Limited market availability

• High cost of issuance

• Lack of investor interest

Why are pandemic bonds not effective for diversifying a portfolio?

• They are not widely available

• They have low returns

• They are correlated with the market

• They are too expensive

What is a major flaw in the World Health Organization's financing facility?

• Complex legal requirements

• High correlation with market assets

• Inadequate funding

• Lack of transparency

According to the transcript, what is the real issue in responding to outbreaks?

• Insufficient technology

• Poor communication

• Inadequate preparedness

• Lack of financial resources

What does the World Bank have that contradicts their claim of no response funds?

• A large fund for developing countries

• An emergency response team

• A new pandemic bond

• A global health initiative