Thailand Builds a Bond Market

Developing a local-currency bond market tops the agenda of many emerging economies intent on financial reform. The reasons are clear: a deep and liquid bond market provides an alternative to bank credit and thus helps to create a more competitive financial sector and to lower the cost of borrowing. And bonds tend to have longer maturities than bank loans in these economies, thereby reducing the need for offshore borrowing, along with its attendant currency risk. But how should governments set about developing a bond market where none exists? Thailand, which has built one quite rapidly, points the way.