Unorthodox emerging markets from Bitcoin to the Bosphorus

The GlobalCapital Podcast

Nov 26 2021 • 31 mins

Turkey has once again defied monetary policy orthodoxy by cutting interest rates in a bid to tackle inflation, which is running at around 20%. The results on the country’s currency, the lira, have not been pretty and it has plummeted in value. But what does that mean for the country’s access to capital markets? This is, after all, a sovereign borrower with a big presence in bond markets and the country’s banks and companies also rely on international funding.

We discuss why the reaction to the interest rate cut in the bond market was muted but highlight the risks that loom large for Turkey’s capital markets.

Meanwhile, the self-styled “CEO of El Salvador — its president Nayib Bukele — is attempting what might generously be called a novel form of sovereign financing. He wants to issue a $1bn bond that pays out based on the performance of Bitcoin. And he wants to use some of the proceeds to build a new city… called Bitcoin City… at the foot of a volcano…

We deliberate over whether this is a good deal for investors or not (spoiler alert: we don’t think it is) and what Bukele might be up to.

We also discuss the latest findings from our survey about life in the capital markets after Covid and how it has affected banks’ attitudes to diversity.