A Framework for Developing Secondary Markets for Government Securities

July 1, 2008

Preview Citation

Format: Chicago

Zsofia Arvai, and Geoffrey M Heenan. A Framework for Developing Secondary Markets for Government Securities, (USA: International Monetary Fund, 2008) accessed November 21, 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 consolidates previous work on the development of secondary markets for government securities, and focuses on the sequencing of measures necessary for their development. Six main lessons are identified: (i) a commitment to achieving and maintaining a stable macroeconomic environment, especially prudent fiscal policy, should underpin market development; (ii) a sound and transparent public debt management strategy supports secondary market activity; (iii) a deep and diverse investor base is required; (iv) poor market infrastructure leads to high transaction costs, slow order execution, and excessive operational risk, which all inhibit trading; (v) secondary market growth is facilitated by effective monetary policy implementation; and (vi) reforms should be sequenced to ensure even development of all the structures supporting the secondary market.

Subject: Government debt management, Government securities, Public debt, Securities, Securities markets

Keywords: Debt management, Market development, Market infrastructure, Monetary policy, WP

Publication Details

Pages:

55
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/174
Stock No:

WPIEA2008174
ISBN:

9781451870329
ISSN:

1018-5941

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