Managing Risks in Financial Market Development: The Role of Sequencing

June 1, 2003

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Format: Chicago

Managing Risks in Financial Market Development: The Role of Sequencing, (USA: International Monetary Fund, 2003) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper proposes an integrated and risk-based approach to the sequencing and coordination of reforms to develop domestic financial markets. The paper argues that there is a hierarchy of financial markets that reflects the complexity of risks in each market and the interlinkages among markets. On the basis of this hierarchy, a sequencing of market development and risk-mitigation measures is proposed to minimize both macroeconomic and financial risks. Capital account opening can complement (but not substitute for) domestic institutional and market reforms to support the growth of local financial markets. The paper also argues that domestic institutional investors are critical to market development and risk mitigation.

Subject: Currency markets, Financial markets, Financial regulation and supervision, Market risk, Money markets, Securities markets, Stock markets

Keywords: Active market, Asia and Pacific, Capital account liberalization, Capital markets, Central bank, Continuous market, Currency markets, Debt market, Debt securities market, E. derivatives market development, East Asia, Financial condition, Financial markets, Global, Government bond, Interbank market, Interest rate, Market development, Market development policy, Market liquidity, Market participant, Market risk, Market rule, Money markets, Price discovery, Primary market, Secondary market, Securities markets, Sequencing, Stock markets, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/116
Stock No:

WPIEA1162003
ISBN:

9781451853957
ISSN:

1018-5941

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