Local Currency Bond Markets and the Asian Bond Fund 2 Initiative

Liquidity in the eight government bond markets in which the ABF2 invests has improved significantly since the fund's inception in 2005. These improvements may be traced to the consolidation of issuance in a few benchmark maturities, an increase in market making activity, and the lowering of barriers to participation by non-resident investors. In each of these factors, the ABF2 project played an important catalytic role. But there remains work to be done. Local-currency corporate bond markets have yet to develop active secondary markets. These markets would benefit from more effective market making arrangements and the introduction of certain types of derivatives.

Full publication: Weathering Financial Crises: Bond Markets in Asia and the Pacific

Keywords: Bond markets, yield curve, derivatives, market liquidity

JEL Classification: E43, F21, G12, G18

Suggested Citation: Suggested Citation

Chan, Eric and Chui, Michael K.F. and Packer, Frank and Remolona, Eli M., Local Currency Bond Markets and the Asian Bond Fund 2 Initiative (January 1, 2012). BIS Paper No. 63f, Available at SSRN: https://ssrn.com/abstract=2005843