The Czech National Bank published a working paper analysing investor demand for inflation-linked government bonds using detailed securities holdings data, finding pronounced market segmentation driven by investor clientele effects. Insurance companies, despite predominantly nominal liabilities, underinvest in inflation-linked securities, while pension funds overinvest. Investors hedging inflation risk show a strong preference for bonds indexed to domestic rather than foreign inflation. The paper also uses a regulatory reform announcement as quasi-experimental evidence that regulatory requirements can shape demand for inflation-linked bonds.
Czech National Bank 2026-04-16
Czech National Bank publishes research on investor demand and regulatory effects in inflation-linked bond markets
The Czech National Bank published a working paper analysing investor demand for inflation-linked government bonds, finding pronounced market segmentation driven by investor clientele effects. The study shows that insurance companies underinvest and pension funds overinvest in inflation-linked securities, investors strongly prefer bonds indexed to domestic inflation, and regulatory requirements can materially shape demand for these instruments.