While the initiative by Asian central banks to improve the regional bond markets via pooling reserves to invest in local markets has merit, it may not work as long as the region maintains fixed currency regimes, warns a recent report by Standard Poor's.
John Chambers, a credit analyst at SP in New York, says the 11 central banks and monetary organizations in the Asia-Pacific region that set up the $1 billion Asian Bond Fund from their foreign reserves have the right idea that they can improve their sovereign creditworthiness by deepening their domestic capital markets.
Governments, banks and companies in Asia or elsewhere borrow abroad because...
