Bond markets in emerging economies: an overview of policy issues
Central banks have multiple interests in the development of bond markets. At a fundamental level, the government bond markets help to fund budget deficits in a non-inflationary way and so enhance the effectiveness of monetary policy. In addition, many central banks use government bond markets for the conduct of monetary policy. They often act as agents for the government in various aspects of the management of government debt. They oversee clearance and settlement systems, and they are responsible for the stability of the financial system, often directly supervising banks. This multiplicity of interests means that the policy issues that arise are very diverse. Many of them were considered by a small group of central bankers at the BIS during a two-day meeting in December 2001. This paper summarises some of the more important issues discussed in this volume.