The Research Of Asian Bond Market In The Monetary And Financial Cooperation Of East Asia

The development of bond market in the Asian region has become a focus of policy-makers over the past few years, with at least three intergovernmental working groups among countries in the region currently examining the issue. The consensus for developing Asian Bond Market is a result of the 1997 Asian financial crisis, which the underdevelopment of the region's bond markets is thought to have greatly exacerbated. To be more specific, the weaknesses identified at the time of the Asian financial crisis included an excessive reliance on bank-intermediated financing; difficulties in borrowing longer term and the non-flexible exchange rate system. Under such circumstance, the work is being undertaken in an effort to strengthen the financial sectors of East Asian countries and to reduce the vulnerabilities to future financial crises. So, the research on Asian Bond Market is necessary and full of realistic significance.Although the concept of Asian Bond Market was proposed after Asian financial crisis, this concept includes two aspects in fact: the first is the national level, which means the local currency bond market, and the second is the regional level. Among which it also includes two different contents: the issue and investment among different local currency bond markets and the regional bond market, which issues Asian currency-basket bonds or regional currency denominated bonds. However, in these different aspects, each one includes its own dilemma: the local currency bond markets face the serious structural imbalance; the issue and investment among local currency bond markets faces the deficiency and insufficient in liquidity and opening degree; and after measuring financial integration in the East Asian area, we also found that this index in East Asian is also quite low. All of these point out that the ideal of developing Asian Bond Market is facing realistic dilemma.According to the theoretical analysis and empirical test in this paper, the developing of Asian Bond Market has its own realistic importance: not only on its necessities but also on its feasibility. This may be the ideal of this market. However, during the process of developing, Asian Bond Market also faces many dilemmas. In this situation, exploring the reasons why so many dilemmas and the way to solve these problems become the main point and purpose of this paper. So, in this paper, we recommend that the national bond markets should be developed with a view to integrating them with regional market at same stage. Under the guidance of this developing path, we can build Asian Bond Market from its issuers, investors and the market infrastructure.