Sovereign state-contingent debt instruments (SCDIs), such as GDP-linked bonds, as a countercyclical and risk-sharing tool remain appealing. Yet, take-up of such instruments has been limited. In view of recent renewed interest among academics, market participants, and policymakers, including the G20, IMF staff analyzed the benefits and challenges associated with SCDIs, possible benchmark designs that could underpin self-sustaining liquid markets, and the case for official sector interventions to support market development. […]