This paper focuses on some of the practical issues involved in developing voluntary domestic markets for government debt.

The main problem that this paper addresses is that the people's bank of China and China's state-owned banks have undertaken and continue to undertake large quasi-fiscal activities. Transfers from the Chinese banking system in the form of interest subsidies and loan default averaged over 5% of...

Recent events in some European countries might suggest that increased capital inflows inevitably appreciate the real exchange rate and increase financial fragility. Hence, opening domestic financial markets to international investors seems a perilous undertaking. If autarky is rejected, however,...