Central banks talk about tie-up of the region's debt market

The Hong Kong Monetary Authority (HKMA) is in discussions with other central banks to link central debt securities depositories in an attempt to boost the development of the region's debt market.

Chief executive Joseph Yam Chi-kwong said the authority had agreed in principle with the Reserve Bank of Australia to establish a bilateral link between Hong Kong's Central Moneymarkets Unit (CMU) and the Reserve Bank Information and Transfer System.

The authority was also in discussions with the Reserve Bank of New Zealand, the People's Bank of China and other central banks in the region on establishing links, he said.

He said bilateral links were the first step in forming the Asian Clear network which would allow the clearance of cross-border trades in securities in Asian time.

'In Southeast Asia - even with the most sophisticated market infrastructure and market making systems - liquidity may be a problem simply because the markets themselves are small,' he said.

'The linkage of domestic depositories will facilitate trading, and hence enlarge the investor base and broaden the market to create the critical mass for Asian debt markets to play a truly meaningful role,' he said.