Publication: Guidance Note for Developing Government Local Currency Bond Markets
Date
2021
ISSN
Published
2021
Author(s)
Hashimoto, Hideo
Mooi, Yen
Pedras, Guilherme
Roy, Arindam
Chung, Kay
Galeza, Tadeusz
Papaioannou, Michael G.
Katz, Peter
Bango, Zsolt
Gragnani, Jose Antonio
Abstract
This guidance note was prepared by
International Monetary Fund (IMF) and World Bank Group staff
under a project undertaken with the support of grants from
the Financial Sector Reform and Strengthening Initiative,
(FIRST). The aim of the project was to deliver a report that
provides emerging market and developing economies with
guidance and a roadmap in developing their local currency
bond markets (LCBMs). This note will also inform technical
assistance missions in advising authorities on the
formulation of policies to deepen LCBMs. The guidance note
discusses commonly faced challenges and bottlenecks in the
journey to efficient and deep LCBMs. In particular, the
guidance note explores how to overcome difficulties in
implementing some existing best practices. Experience points
to the interdependent nature of the required development
actions and the need for supportive actions outside the
narrow field of LCBM agents. The challenges discussed and
accompanying policy guidance draw from the IMF and World
Bank’s extensive technical assistance (TA) provision in this
area, cross-country experience in LCBM development, and
results from a recent survey of country authorities. The
guidance note intends to be a resource for a wide range of
stakeholders interested in government bond market
development. Country authorities and TA providers can use
the diagnostic on the level of LCBM development to design a
proper sequence of policy actions to further improve the
functioning of the domestic government debt market. Country
authorities and IMF and World Bank country teams can use the
guidance note to identify key macroeconomic and financial
issues linked to LCBM development and integrate it into
their policy analysis and advice. The diagnostic findings
regarding weaknesses in LCBMs also can be used to help
identify financial vulnerabilities and their remedies, in
the authorities’ ongoing financial sector surveillance and
in the context of Financial Sector Assessment Programs and
Financial Sector Stability Reviews.
Citation
“Hashimoto, Hideo; Mooi, Yen; Pedras, Guilherme; Roy, Arindam; Chung, Kay; Galeza, Tadeusz; Papaioannou, Michael G.; Katz, Peter; Bango, Zsolt; Gragnani, Jose Antonio; Gurhy, Bryan; Paladines, Cindy. 2021. Guidance Note for Developing Government Local Currency Bond Markets. © Washington, DC : World Bank. http://hdl.handle.net/10986/37787 License: CC BY 3.0 IGO.”