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New Strategies for Emerging Domestic Sovereign Bond Markets in the Global Financial Landscape

Author

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  • Blommestein Hans J

    (OECD)

  • Santiso Javier

    (OECD)

Abstract

The forces shaping the revolution in banking and capital markets have radically changed the financial landscape during the past three decades. A remarkable feature of this changing new landscape has been the astonishing rate of internationalisation of the financial system in the last two decades, with emerging markets becoming increasingly important participants.At times this participation has led to excessive reliance on foreign financing, making the participation of these countries in the global financial system more vulnerable to shifts in expectations and perceptions. The sovereign debt management strategy suffered from many structural weaknesses, failing to take into account international best practices in financing budget deficits and developing domestic government securities markets. Consequently, emerging markets experienced episodes of serious financial crises.Against this background, this article focuses on new and more sophisticated strategies to develop domestic bond markets, taking into account the risk profile, complexities and other constraints of emerging markets. The article's central thesis is that risk-based public debt management and liquid domestic bond markets are important mutually reinforcing strategies for emerging financial markets to attain (1) enhanced financial stability, and (2) a more successful participation in the global financial landscape. It will also be shown that this twin-strategies approach requires taking a macroeconomic policy perspective.

Suggested Citation

  • Blommestein Hans J & Santiso Javier, 2007. "New Strategies for Emerging Domestic Sovereign Bond Markets in the Global Financial Landscape," Global Economy Journal, De Gruyter, vol. 7(2), pages 1-58, June.
    • Handle: RePEc:bpj:glecon:v:7:y:2007:i:2:n:2
    DOI: 10.2202/1524-5861.1276
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    1. Joel Smith, "undated". "Technical Working Paper: Creation of the September 2009 Baseline of the 2005 MATH SIPP+ Microsimulation Model and Database," Mathematica Policy Research Reports c2dd86c53a2b4f979e41ac610, Mathematica Policy Research.
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    Cited by:

    1. Laurissa Mühlich, 2011. "South–South Regional Monetary Cooperation: Potential Gains for Developing Countries and Emerging Markets," Chapters, in: Ulrich Volz (ed.), Regional Integration, Economic Development and Global Governance, chapter 13, Edward Elgar Publishing.
    2. Dennis Essers & Hans J. Blommestein & Danny Cassimon & Perla Ibarlucea Flores, 2016. "Local Currency Bond Market Development in Sub-Saharan Africa: A Stock-Taking Exercise and Analysis of Key Drivers," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(5), pages 1167-1194, May.
    3. George Furstenberg, 2008. "Assessing the Competitiveness of International Financial Services in Particular Locations: A Survey of Methods and Perspectives," Open Economies Review, Springer, vol. 19(4), pages 539-556, September.
    4. Fritz, Barbara & Mühlich, Laurissa, 2007. "South-south monetary integration: the case for a research framework beyond the theory of optimum currency area," Discussion Papers 2007/20, Free University Berlin, School of Business & Economics.
    5. Jonathan A. Batten & Warren P. Hogan & Peter G. Szilagyi, 2012. "Foreign Bond Markets and Financial Market Development: International Perspectives," Chapters, in: Masahiro Kawai & David G. Mayes & Peter Morgan (ed.), Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia, chapter 12, Edward Elgar Publishing.
    6. Gilles Dufrénot & Anne-Charlotte Paret, 2018. "Sovereign debt in emerging market countries: not all of them are serial defaulters," Applied Economics, Taylor & Francis Journals, vol. 50(59), pages 6406-6443, December.
    7. Shanaka J. Peiris, 2013. "Foreign Participation In Local Currency Bond Markets Of Emerging Economies," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(03), pages 1-15.
    8. Imide Israel O. & University Edih O. & Osadume Richard C. & Fidelia Igemohia, 2022. "Globalization, Transportation and Marketing of Goods Made in Africa: The New Paradigm," LOGI – Scientific Journal on Transport and Logistics, Sciendo, vol. 13(1), pages 152-162, January.
    9. Ahmed Abdullahi D., 2011. "International Financial Integration, Investment and Economic Performance in Sub-Saharan African Countries," Global Economy Journal, De Gruyter, vol. 11(4), pages 1-28, December.
    10. Jamel Boukhatem, 2009. "Essai sur les déterminants empiriques de développement des marchés obligataires," Working Papers hal-04140858, HAL.
    11. Hassan, M. Kabir & Ngene, Geoffrey M. & Yu, Jung-Suk, 2015. "Credit default swaps and sovereign debt markets," Economic Systems, Elsevier, vol. 39(2), pages 240-252.

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