Can Structured Finance Support New Ways of Anticipating and Managing Crisis?

Abstract

The world is facing a pivotal moment when the interconnectedness of crisis anticipation and crisis management needs to be formalized in financial policy planning. The onset of COVID-19 demonstrated the across-the-board lack of preparedness of economic actors public and private. While the private sector mostly looked at the short-term profitability, the public sector dragged their collective feet on investing in public works without the usual political motivations. As both a banker and public policy professional, I am struck by the high degree of dependence on taxation to fund public good infrastructure in 2022. I see an urgent need to change our dialogue around public-private investment, to begin to address simultaneously the financial goal of profitability and political goals for the public good. This article explores a range of solutions available to capital markets with the elasticity to address and absorb the future shocks to which we must face up.