Bond Market Conference to Strengthen the APEC Region's Financial Systems

Financial market participants, analysts, lawyers, accountants and regulators and from the Asia Pacific region and Europe discussed the measures needed to develop domestic and regional bond markets in the Asian region at a major conference held in Taipei, Chinese Taipei, on 10/11th May.

The conference, organized by the APEC Business Advisory Council (ABAC) and the Pacific Economic Cooperation Council (PECC) will help inform advice to be provided to APEC Finance Ministers when they meet with ABAC in Santiago Chile in September.

A number of APEC economies have well developed bond markets, but they are not prominent in the financing structures in some other APEC economies - contributing to lending- borrowing mismatches and a cause of financial system instability in recent years.

The conference was highly successful in discerning the key ingredients required if robust markets are to develop. These include a sound macroeconomic policy framework, internationally accepted documentation and processes, efficient settlement systems and within a legal framework where contracts are enforceable and insolvency and agreed work out procedures are in place.

The development of a robust regional market would involve significant policy reforms in the area of capital controls and exchange rate arrangements in some economies to enable investors and borrowers to participate in regional bond issues.

It was recognized that capacity building measures would help economies to develop the necessary framework and skills base and market participants indicated their strong interest in supporting such measures. Measures are especially needed in strengthening credit rating practices, promoting the convergence of accounting standards, regional cooperation in the area of insolvency law and work-out practices and securitisaton.

Major recommendations on how these could be pursued will be discussed with APEC Finance Ministers in September.