This special feature identifies a potential synergy between the growth of foreign exchange reserves and the development of regional bond markets. The synergy arises from the use of public obligations to finance (or to sterilize) holdings of foreign exchange reserves. The fact that these...

The liquidity of Asian local currency bond markets varies with overall size, turnover, issue size and dispersion of holdings. Recently, returns on higher-yielding instruments have led local currency bonds to outperform US Treasuries in aggregate

By the 1990s, basis risk had caused bond markets, like money markets before them, to start shifting from the use of government rates as benchmarks to the use of private ones. Developments since the Great Financial Crisis of 2007-09, including derivatives reforms and Libor scandals, had the...