RENEWED EFFORTS ARE under way to establish an Asian bond market, with the aim of better channelling Asia's bountiful savings to productive local recipients of capital.
This comes as the imbalance of Asian central banks holding vast sums of United States treasuries becomes stark.
America's huge trade and fiscal deficits mean it is heavily dependent on Asian currency surpluses being recycled into its public debt markets and for the time being Asian governments have little choice but to accommodate it.
A key trigger for the creation of an Asian bond market was the 1997 financial crisis. Lessening the reliance on short-term foreign borrowing and making proper use of domestic savings promised to deliver greater financial market and economic stability.
The idea was to enable institutional investors to buy bonds denominated in local currencies issued by Asian governments and private-sector firms.
An added advantage would be better capital allocation and more efficient corporate balance sheet management.