Asian Bond Markets Initiative Group of Experts (GoE) Report for Task Force 4
The Group of Experts on Cross-border Bond Transactions and Settlement Issues (GoE) was established in 2008 by the Asian Bond Markets Initiative (ABMI). This report put forward for consideration three options for a regional settlement intermediary (RSI) and suggested organizing a group of market experts for further investigation of these options. The final results of the GoE work are presented in this report. PART I contains the result of the estimation of cross-border transaction costs in ASEAN+3. PART II discusses the results of the feasibility study of the RSI options and presents recommendations for the next step. Finally, PART III presents the list of major barriers to cross-border bond transactions and settlement and a set of recommendations to address them. Although the three parts are interrelated, each covers a topic independent enough to be discussed separately. Thus, each part carries its own introduction and summary. Also policy recommendations are formulated separately for the RSI and the barrier study and contained in PART II and PART III.
Common Understanding on Cross-Border Business Continuity Planning and Cybersecurity
The Cross-Border Settlement Infrastructure Forum (CSIF), a forum under Task Force 4 of the Asian Bond Markets Initiative published the Common Understanding on Cross-Border Business Continuity Planning (BCP) and Cybersecurity during the 21st ASEAN+31Finance Ministers and Central Bank Governors meeting in Manila, the Philippines. The objective of the publication is to create basic common understandings among CSIF members. The finance ministers and central bank governors were pleased with the publication and noted that the issues of BCP and cybersecurity are essential for creating safe linkages among Central Securities Depository–Real Time Gross Settlement (CSD-RTGS) systems to ensure the resilience of increasingly interconnected financial systems.
General Principles for participation of non-ASEAN+3 country in ASEAN+3 Bond Market Forum
ASEAN+3 agreed on accepting interested non-ASEAN+3 countries in ASEAN+3 Bond Market Forum (ABMF) as part of the Asian Bond Markets Initiative (ABMI). ABMF is a forum participated by both policymakers and market participants to identify impediments to market development and integration and address them together. To guide and govern the acceptance process, ASEAN+3 developed these General Principles. Interested non-ASEAN+3 countries can send a Letter of Interest to Co-chairs of ABMI Task Force 3, Ministry of Finance of Japan, Ministry of Finance of Malaysia, and the Securities Commission of Malaysia, in accordance with the General Principles.
Promoting Green Local Currency Bonds for Infrastructure Development in ASEAN+3
The Asian Development Bank and the Association of Southeast Asian Nations and the People’s Republic of China, Japan, and the Republic of Korea (ASEAN+3) are looking to explore options to promote green local currency-denominated bonds to meet the region’s infrastructure development needs. Green bonds—supported within the ASEAN+3 framework—would help meet the long-term financing of the region especially in its transition to a low-carbon region. This publication highlights an assessment study of green bond markets in ASEAN+3, identifies the barriers to green bond market development, and proposes recommendations to scale up green bond markets for infrastructure development in ASEAN+3.
Good Practices in Developing Bond Market: with a focus on government bond market
ASEAN+3 and Asian Development Bank (ADB) together issued a paper, "Good Practices in Developing Bond Market," which discusses key building blocks of bond markets, particularly government bond markets, and successful efforts of selected countries in developing them.
ABMI: Policy Maker Achievements and Challenges
This paper presents a comprehensive review of what ASEAN+3 policy makers have achieved under the Asian Bond Markets Initiative (ABMI) and what they are planning to do next over the medium-term. It also provides recommendations for policy makers’ consideration in addressing new sources of market volatility and other challenges within and outside the framework of ABMI.
Facilitating Foreign Exchange Risk Management for Bond Investments in ASEAN+3
Bond investors typically have a long position in local currency bond markets. To manage their foreign exchange (FX) risk, they may want to hedge that exposure for a period of time. They also want to be sure they can easily convert the local currency to dollars upon the sale of a bond. This study reviews the FX and FX hedging markets in ASEAN+3 as they relate to cross-border investments in local currency bonds, and makes recommendations to facilitate the development of the markets and FX risk management.
Local Currency Bonds and Infrastructure Finance in ASEAN+3
The need for infrastructure investment among ASEAN+3 members is well documented, with estimates for needed investment through 2020 reaching as high as US$550 billion. Local currency financing of infrastructure projects has the important advantage of avoiding the currency risk that can arise when a project generating revenues in the domestic currency has foreign currency-denominated debt service requirements. This study was undertaken under ABMI and funded by the Government of the PRC. It addresses two key questions: (i) Why is local currency bond financing not more widely used for infrastructure projects in ASEAN+3? and (ii) What can be done to promote infrastructure bond financing?
Broadening the Investor Base for LCY Bonds
Since the launch of Asian Bond Markets Initiative (ABMI), local currency bond markets in the region have grown rapidly in recent decades in terms of size and diversity of issuers. This study was undertaken under ABMI and funded by the Government of Japan. It focuses on measures to expand the investor base for local currency bonds in ASEAN, the PRC, and the Republic of Korea, with the goal of generating greater variety in investment objectives and a wider range of investment strategies.