The Asian Bond Market Initiative

Two market practitioners discuss the aims and implications of the ABMI.

Asians tend to save for the future while Americans borrow from the future. The irony is that the US, the world's superpower, is financing a standard of living beyond its means by borrowing excessively from the world, particularly Asia.

Luckily for now, the status of the US dollar as the world's reserve currency makes this spending possible and the lack of deep and liquid bond markets in Asia makes it difficult to allocate Asian savings through regional financial markets. This also makes Asian economies vulnerable to external shocks.

Net capital outflow from Asia means that Asia is providing savings to the rest of the world. Asia is exporting safe capital...

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