Developing the domestic government debt market : from diagnostics to reform implementation

This is the second volume of a study on the insights from a 12-country pilot program on public debt management and domestic government debt market development. The discussion of domestic government debt market development in this book uses a building block approach to gain insights into development priorities and approaches across the 12 countries in the pilot program. Chapter 2 discusses the essential importance of money markets for the development of a government securities market. Chapter 3 addresses primary markets and describes how the authorities borrow in the domestic market, including the selection of instruments, issuance techniques, and relationships with financial intermediaries. Chapter 4 explains that the 12 pilot-program countries vary considerably in the composition of investors, but few have well-established contractual savings institutions and in all countries commercial banks play a dominant role. Chapter 5 considers the importance of well-functioning secondary markets for providing a cost-efficient environment in which market participants can trade government securities in a fair and transparent manner. Chapter 6 describes how an efficient securities custody and settlement infrastructure strengthens investor confidence, limits exposure to systemic risk, and reduces transactions costs. Chapter 7 discusses the importance of sound debt market regulation. Finally, chapter 8 highlights the complexity of reform programs, the interaction between different aspects of debt markets, and the importance of path dependence (that is, previous outcomes and measures) in debt market development.