Asian countries should embrace the euro to diversify their currencies and credit risks and to help finance the region's eventual recovery, according to the head of Barclays International Asia-Pacific.
At a debt-market conference yesterday in Hong Kong, Roger Davis said the euro would eventually match the United States dollar in terms of market share of currencies used in international trade.
For example, the euro bond market was comparable in size to that of the US, he pointed out.
'Asian companies currently face bleak domestic liquidity conditions as regional banking systems rein in their domestic asset portfolios to offset non-performing loans,' Mr Davis said. 'The euro bond market should open up a vital avenue for these companies, allowing them to raise finance overseas and to diversify their risk into a liquid market.' Mr Davis said the euro's emergence would change the pattern of investment in Europe's fixed-income markets.
Investors would need to develop a greater appetite for credit risk in these markets in order to outperform market benchmarks, he said. They would also need to move out along the yield curve into longer maturing bonds.
Already, the euro appeared healthy, with US$60 billion (about 51.7 billion euros) issued this year, he said.