The Establishment And Development Of Asian Bond Markets

With the development of financial liberalization and globalization, monetarycooperation is becoming important to the safety of regional economy. East Asia, as a fastdeveloping area, however, its monetary cooperation is lag behind. After the Asian financialcrisis, different countries began to cooperate in different ways, like FTA, Monetary Exchange(Chiang Mai Initiative), bonds fund and rates cooperation. But they are not enough for EastAsia. In fact, the Asian financial crisis is mostly due to the absence of vibrant bond markets,which is now a hot topic in East Asian monetary cooperation.After the raise of Asian bond markets in the first ACD conference, many people haverepeatedly emphasized the importance and the probability of creating regional bond marketsin East Asia. Asian bond markets will transfer savings into investment,contribute to regionalfinancial stability and integration, reduce the loss during the economic disaster and create aplatform for Asian monetary cooperation. So creating Asian bond markets fits the benefits ofthe area, can facilitate the financial cooperation in the region. At the same time, domesticbond markets is growing fast through the efforts of different countries. Which makes regionalbond markets cooperation possible.America, Japan and England are well developed in bond markets. From the fourcountries, we can see that the regional bond markets needs lots of conditions. There should bean international or regional financial center, good financial infrustructure as well as fastdeveloping domestic bond markets and etc. As the Asian bond markets is immature, it shouldbe developed step by step. The focus is to develop the domestic bond markets, build thefinancial infrustructure and hold bilateral cooperation in multilateral casement.China is one of the most important countries in East Asia. The regional bond marketscan not develop well without china. But, China is very poor in the bond markets, so it isdifficult for china to join in the process in the short term. In order to solve the problem,Hongkong can be treated as the media. China should foster its own domestic bond markets,and issue RMB bond in regional financial markets with the process of Capital Accountconvertibility. Finally, RMB will be world currency.