Bond Market Development in East Asia

The development of bond markets in the Asian region has become a focus of policymakers over the past few years, with at least three intergovernmental working groups among countries in the region currently examining the issue. The work is being undertaken in an effort to strengthen the financial sectors of east Asian countries and to reduce vulnerabilities to future financial crises. Weaknesses identified at the time of the Asian financial crisis included an excessive reliance on bank-intermediated financing and difficulties in borrowing longer term, particularly in local currency. This article begins with a recap on why bond markets should be developed, examines progress in the Asian region to date and concludes with a discussion on some recent multilateral initiatives.