Since the late 1990s' Asian crisis, ASEAN‐5 countries have expended considerable effort in developing their bond markets. However, the size of these markets relative to GDP has hardly changed. Can we explain this? And does it mean that domestic markets have not, in fact, developed? The article argues that bond market growth has been held back by a sharp fall in business investment, which has left firms with little need for bond borrowing. Even so, markets have developed in other ways, to such an extent that substantial amounts of foreign portfolio investment have begun to flow into ASEAN‐5 bonds. These developments have important ramifications. With the investor base growing and infrastructure investment likely to rise, ASEAN‐5 bond markets could expand rapidly, holding out the prospect that the region could finally achieve ‘twin engine’ financial systems in the near future.
The paper first describes how the Czech National Bank (CNB) moved gradually from a fixed exchange rate regime to the frontiers of Inflation-Forecast Targeting. It then focuses on the CNB's recent experience in adding the exchange rate as a complementary monetary policy tool to stimulate the economy and combat the risks of deflation when the policy interest rate is at the zero lower bound. It assesses the theoretical basis of such a policy, the communications approach used by the CNB when announcing the new framework, and the effects thus far on inflation and output.
This paper examines development challenges facing bond markets in the ASEAN-5 (Indonesia, Malaysia, Philippines, Singapore, and Thailand). It first assesses their level of development, finding that bond market frameworks-that is, the quality of the physical infrastructure, monitoring, and regulation-compare favourably with those in other emerging markets. The paper then considers possible further enhancements, including changes in disclosure practices as well as reforms of ratings agencies, central bank liquidity management, and taxation. It also considers steps to develop derivatives markets, which in some countries remain quite small. Finally, the article draws lessons from the global financial crisis in developed markets for the future development of ASEAN-5 markets.
This paper examines a range of issues relating to bond markets in the ASEAN5 (Indonesia, Malaysia, Philippines, Singapore and Thailand)-physical infrastructure including trading, clearing and settlement; regulation, supervision and legal underpinnings; and derivatives markets-and finds that the frameworks compare well with other Emerging Markets, following a decade of reform. A number of areas where further enhancements could be made are highlighted. The paper also examines the interrelationship between central bank management of short-term interest rates and domestic currency liquidity, and development of the wider money and bond markets; and suggests some lessons from the recent crisis in developed country financial markets which may be important for the future development of the ASEAN5 markets.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.