This is to encourage governments to issue simple savings products – in effect, time limited bonds exchangeable for cash at any time, but with a penalty for early redemption – and make these the only or main products that can be offered by tax favoured tax savings schemes like pension funds and the equivalent of the UK’s Individual Savings Account schemes.
Entirely missing the point that bonds are the wrong investment for the long term. And he’s entirely missing the liquidity problem of everyone having a put on the bonds, hasn’t he?
Say the bonds are issued at 3% – he’s mentioned this number before. So, inflation rises to 5%. Everyone and their Granny sells their bonds back to the government.
And then what?