Abstract

A key policy prescription for fending off financial crises in emerging markets has been the development of local bond markets, and this strategy has been embraced by a number of policymakers and international organizations (see World Bank and IMF, 2001). From a macro-economic perspective, local bond markets could soften the impact of lost access to international capital markets or bank credit by providing an alternative source of funding.40 From a microeconomic perspective, they could help create a wider menu of instruments to deal with inherent currency and maturity mismatches in emerging markets (see Eichengreen and Hausmann, 1999: and HKMA, 2001).

Recent Developments and Policy Issues
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