Developments of Domestic Government Bond Markets in EMEs and Their Implications

During the past decade, domestic government bond markets in EMEs have developed further. Market depth has increased, maturities have lengthened and the investor base has generally broadened, although the degree of progress has varied across countries and several deficiencies remain. The expansion can be attributed to improvements in domestic policy management and a reduction in external financing needs.

The commensurate reduction in currency mismatches has increased the scope for countercyclical monetary policy. Financial stability has broadly benefited from this development, but the volatility stemming from derivatives markets and greater foreign holding of domestic currency debt present some additional risks.

Full publication: Fiscal Policy, Public Debt and Monetary Policy in Emerging Market Economies

Keywords: Financial markets and the macroeconomy, international lending and debt problems, financial aspects of economic integration

JEL Classification: E44, F34, F36

Suggested Citation: Suggested Citation

Mehrotra, Aaron N. and Miyajima, Ken and Villar, Agustin, Developments of Domestic Government Bond Markets in EMEs and Their Implications (October 1, 2012). BIS Paper No. 67c, Available at SSRN: https://ssrn.com/abstract=2205193