The ABMI was launched in December 2002 by the ASEAN+3 member countries to develop local currency (LCY) bond markets as an alternative source of funding to foreign-currency denominated bank loans to minimize the currency and maturity mismatches that had made the region vulnerable to the sudden reversal of capital inflows. Policymakers in the ASEAN+3 region have also aimed to promote regional financial cooperation and integration under ABMI. This approach is based on the rationale that more developed and integrated LCY bond markets would enable the economies in the region to mobilize domestic savings to finance their long-term investment needs and reduce their vulnerabilities to the reversal of capital flows.
The Asian Development Bank (ADB) has been working with ASEAN+3 and serving as Secretariat to provide technical support for the implementation of the initiative.
- The ASEAN Secretariat, under the Technical Assistance Coordinating Team (TACT), coordinates the provision of technical assistance projects to interested member countries including the Philippines.
- The ABMI Taskforce meetings are held semi-annually as well as the Finance and Central Bank Deputies' meeting. The accomplishments for the year are reported to the annual meeting of the Finance Ministers and Central Bank Governors.
Task Force 1: Promoting the issuance of LCY denominated bonds. ASEAN+3 established the Credit Guarantee and Investment Facility (CGIF) as an ADB trust fund in 2010 to provide credit enhancement to increase the access of investment-rated firms to LCY bond markets and lengthen the maturities of their bonds. With CGIF guarantees, eligible firms will be able to meet their long-term financing needs by tapping domestic bond markets and markets across the region. CGIF as such will help reduce firms' dependency on short-term foreign currency loans and minimize their vulnerability to sudden reversals of capital flows to the region.
Task Force 2: Facilitating demand for LCY denominated bonds. The ABMI website, AsianBondsOnline, was established to provide data and analyses on LCY bond markets in ASEAN+3, as well as a step-by-step primer on the mechanics of buying and trading Asian government securities. This website also provides information on related custodian and registry arrangements and internet links to market sources. Bond market guides which include information on legal and regulatory frameworks, characteristics of the domestic bond market, among others, are on the same website.
Task Force 3: Strengthening the regulatory framework. The ASEAN+3 Bond Market Forum (ABMF) was established in May 2010 as a common platform to foster standardization of market practices and harmonization of regulations relating to cross-border bond transactions in the region. The ABMF is expected not only to lead the region towards more harmonized and integrated markets, but also to act as the link between ASEAN+3 and the rest of the world in international standard setting and rule-making.
Task Force 4: Improving related infrastructure for bond markets. ASEAN+3 policy makers agreed to set up a Cross-Border Settlement Infrastructure Forum (CSIF) to discuss work plans and related processes for the improvement of cross-border settlement in the region, including the possibility of establishing a regional settlement intermediary. Central banks and Central Securities Depositories (CSDs) in ASEAN+3 will continue to work toward implementing CSDs–real-time gross settlement (CSD–RTGS) linkages over the medium-term.
Link to the ABMI website