War Bonds - An Explainer



Current Ukraine - Russia war has been going on for more than two weeks and with a full-fledged invasion by Russia, Ukraine is desperately looking at all avenues of raising money to fight back.

Now Ukraine cannot raise taxes in a war as it would make them look bad in front of the world and its own people, no country sets aside a budget for a war like this.

Another way could be to look for financial aid from other developed countries. So far, the U.S has promised military aid worth $1 billion. They are also trying to raise $10 billion to aid Ukraine in this war. International financial institutions like International Monetary Fund (IMF) and World Bank could be approached for financial aid.

Ukraine's official Twitter account recently sought donations via cryptocurrencies. They have raised $30 million alone in crypto and people all over the world have come forward to support Ukraine.

But even all this won't be enough, hence enter War Bonds - it is not something new that has been introduced by Ukraine but it has been there for 100 years. During World War - I, Britain sought to raised $350 million at 5%, i.e., $35 billion in today's money. Although they could only raise 30% of it, given the gargantuan amount of money, 30% is still a good amount of money.

With Ukraine, it is different, their War bonds are selling like hot pancakes. They have sought $277 million at a fat yield of 11%.

One reason for their bonds doing well across investors categories could be people believing in Ukraine's cause, they don't care about returns because Ukraine may fall, the government may default, but it's the people's way of showing their support.

This money is anti-Russian, it's for the bigger cause.

P.S - Our sincere prayers to people suffering because of a war which seems to be redundant, let's hope all these ends and the lives of people in the war-hit areas are back to normal.

Do let us know your thoughts on the above topic in the comment section and let a healthy conversation begin.

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Disclaimer

The above information is to spread financial literacy. We are not SEBI registered financial advisors, kindly consult your financial advisor before making any investment decision.


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