During the last major Global South debt crisis in the late 1980s, the United States pioneered an initiative that bundled together all of these countries' debts into a bond that would then be re-packaged and sold to investors. These so-called "Brady Bonds" were very effective in giving many of the poorest, most indebted countries the breathing room they needed to recover.
Now, as developing countries are confronting yet another debilitating debt crisis, an update to the Brady Bond idea is now circulating but this time it's coming from China, not the U.S.
Just like a Brady Bond, the so-called Shanghai Model would roll up poor countries' debt into a bond asset and then sell it to investors. But there's a catch: rather than price it in dollars, the Shanghai Model would use Chinese yuan.
Economists Ying Qian and Yan Wang from Boston University's Global Development Policy Center have been writing a lot lately about the Shanghai Model and exploring its viability. Ying joins Eric & Cobus from Washington, D.C. to discuss whether it really can replicate the success of the Brand Bond.
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