Unifying government bond markets in East Asia
The Asian crisis of 1997 taught policymakers in the region two main lessons. First, to build up foreign reserves. Second, to develop local bond markets. When central banks in the region accumulate foreign exchange reserves from capital inflows, they also sterilise the inflows. Those with large reserves have commonly ended up issuing their own debt for this purpose after selling off government debt from their portfolios. This, however, has meant that much of the opportunity to develop the bond market has been missed. The conversion of central bank debt into government debt may be advisable even if it means "overfunding" by the government. With a single big borrower, the debt would trade in a larger and more liquid market. The article explains how this could be achieved by Indonesia, Korea, Malaysia, Taiwan (China) and Thailand.
Volume (Year): (2003)
Issue (Month): (December)
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- Joshua Aizenman & Nancy Marion, 2002.
"The high demand for international reserves in the Far East: what's going on?,"
Pacific Basin Working Paper Series
2002-08, Federal Reserve Bank of San Francisco.
- Joshua Aizenman & Nancy P. Marion, 2002. "The high demand for international reserves in the Far East: what's going on?," Proceedings, Federal Reserve Bank of San Francisco, issue Sep.
- Aizenman, Joshua & Marion, Nancy, 2003. "The high demand for international reserves in the Far East: What is going on?," Journal of the Japanese and International Economies, Elsevier, vol. 17(3), pages 370-400, September.
- Joshua Aizenman & Nancy Marion, 2002. "The High Demand for International Reserves in the Far East: What's Going On?," NBER Working Papers 9266, National Bureau of Economic Research, Inc.
- Teo Swee Lian, 2002. "Debt market development in Singapore," BIS Papers chapters, in: Bank for International Settlements (ed.), The development of bond markets in emerging economies, volume 11, pages 183-189 Bank for International Settlements.
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