Staff report

Japan will propose that viable bond markets in other Asian nations be established so the private sector can engage in stable, long-term fundraising in local currencies, Finance Ministry officials said Friday.

Building such markets will be a major issue at a meeting of finance ministers from the Association of Southeast Asian Nations, plus China, Japan and South Korea, scheduled for May in Istanbul, the officials said.

Fully functioning bond markets are essential for Asian economic growth, which faltered amid currency crises in late 1990s, as the markets would serve as vehicles for corporations to raise local capital investment funds, they said.

Vice Finance Minister Takayoshi Taniguchi will issue Japan’s proposal, dubbed the Asian Bond Markets Initiative, at a seminar on Asian bond markets scheduled for Saturday in Tokyo. Other speakers at the seminar will include financial experts from China, Indonesia, Malaysia, the Philippines, Singapore, South Korea and Thailand.

Most Asian bond markets are small and have low liquidity. To solve the problem, governments need to issue bonds regularly to help create a benchmark issue in each local market, the proposal says, adding this in turn would help the private sector to raise funds in the markets.

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