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Promoting Financial and Capital Market Development

Voluntary Principles to Attain Core Conditions. We recognized that the task of achieving efficient savings and investment intermediation is not easy. It calls for major efforts by economies, in close collaboration with market participants in the private sector, to strive towards achieving certain core conditions as follows: (i) a sound macroeconomic environment; (ii) stable and transparent legal and regulatory systems; (iii) well-developed market infrastructure; (iv) efficient financial and capital markets institutions; and (v) an array of available financial instruments to meet the region's diverse financing and investment needs.
Recognizing the importance of promoting financial and capital market development in sustaining the growth momentum of the APEC region and in mobilizing longer-term capital for infrastructure investment, we agreed to the following voluntary principles designed to help the APEC member economies in achieving the core conditions.
Sound Macroeconomic Environment
  1. The pursuit of sound macroeconomic policies is an essential element in maintaining strong banking systems and a prerequisite to the development of capital markets, including long-term debt markets. Member economies shall aim towards creating and maintaining a sound macroeconomic environment through prudent monetary, fiscal and exchange rate policies.
Stable and Transparent Legal and Regulatory Systems
  1. The legal and regulatory systems of economies may involve features that inadvertently inhibit capital market development. It is desirable that member economies consider efforts to make the legal and regulatory systems consistent with capital market development.
  2. Sound financial regulation and supervision is critical to capital market development. Where applicable, member economies shall develop a professional cadre of regulators and supervisors with the appropriate competence and training.
  3. Financial regulators and capital market supervisors shall strengthen and expand existing linkages with each other to promote the soundness of the financial system and the protection of investors, so as to reap the benefits and address the challenges of expanding cross-border capital flows.
Well-Developed Market Infrastructure
  1. High quality, transparent and comparable reporting and disclosure on the financial positions of businesses promote investor interest in capital markets. Member economies shall encourage the adoption of high standards in information disclosure and accounting, and ensure that the information is available in a timely manner.
  2. A well-organized, up-to-date and easily accessible database for macroeconomic information can assist investors make well-informed business decisions. Member economies shall make available such information to all investors.
  3. Effective, credible and independent credit rating agencies are important in developing domestic bond markets, particularly because of the assurance they offer investors that certain credit risks can be properly assessed. Member economies will encourage the development of effective, credible and independent rating agencies and, as appropriate, promote the greater use of ratings.
  4. Well-developed and efficient clearing and settlement systems are indispensable to the development of capital markets. In this context, member economies shall take the appropriate steps to facilitate the development of modern clearing and settlement systems to minimize transaction costs and settlement risks.
Financial and Capital Market Instruments

9. Market-based benchmark rates for medium to long term securities facilitate more accurate pricing and encourage the development and deepening of the bond market, including that for municipal bonds. Member economies will consider the costs and benefits of issuing government bonds or of encouraging the issuance of other securities to establish such reference rates.