Asian bond market initiative set up

THE development of an Asian bond market is set to progress further following the announcement yesterday that six working groups had been established as part of the Asian Bond Market Initiative.  

The groupings, chaired or co-chaired by representatives from nine countries, including Malaysia, would be looking at areas as diverse as creating new securitised debt instruments and foreign exchange transactions and settlement issues to improving regional technical coordination.  

The announcement of these initiatives was made by Philippine Finance Secretary Jose Isidro Camacho, speaking as chairman of the Asean+3 Finance Ministers’ meeting here. 

The head of the Malaysian delegation, Second Finance Minister Datuk Dr Jamaludin Jarjis, said Malaysia was pleased to provide assistance, particularly in areas like Islamic instruments, in which Malaysia has had vast experience.  

“We can showcase our success in these areas,” he said.  

Camacho said the Asean+3 meeting agreed to intensify efforts in developing the regional bond market. “This will further strengthen our financial systems by better utilising the aggregate savings in the region and minimising the risk of maturity and currency mismatches,” he said.  

He added that although some progress has been made – with these working groups expected to report their findings by early-2004 – there were still many challenges ahead.  

These included the problems of facilitating access to the market through a wider variety of issuers, and the challenges of developing a deep and efficient enough domestic and regional bond market, he said. 

In an earlier meeting involving only Asean finance ministers, Camacho said, a roadmap was set for the eventual integration within Asean of capital market development, capital account liberalisation, financial services liberalisation and currency cooperation.  

He said a two-pronged approach – institutional capacity building and greater cross-border collaboration – was agreed on by the ministers from the 10-nation grouping.  

On currency cooperation, he said the region would focus first on areas that facilitated and promoted intra-regional trade and deepened economic integration, but refrained from saying when an Asean common currency might come to fruition.  

Also, an “orderly approach” would be taken on capital account liberalisation “with adequate safeguards against volatility and systemic risks,” he added. 

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