Fourteenth International Monetary Fund Public Debt Management Forum Considers the Sovereign Bond Market Ecosystem in Light of New Regulations and Reduced Market Liquidity

Press Release No.14/315
June 27, 2014

Debt managers and central bankers from 44 countries and representatives from the Paris Club, as well as the private sector joined the Fourteenth International Monetary Fund Public Debt Management Forum in Paris, France. The event was co-organized with the Agence France Trésor.

The diversity of participants’ experience from both advanced and emerging markets enriched the discussion that covered a broad range of issues, including sovereign credit risk, the implications of new financial regulations on government bonds markets, and impact of unconventional monetary policies on debt management.

At the opening of the Forum, the Director General of the Treasury of France, Mr. Ramon Fernandez underscored the importance of the regular dialogue fostered by the Forum. He said: “Managing public debt is a very challenging task in a post-crisis environment and an issue on which advanced and emerging economies can learn a lot from exchanging views and experiences, as well as learn from the insight and knowledge sharing of international organizations, such as the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development.”

Discussions at the Forum took place against the background of an improving financial system but one that continues to be driven by liquidity rather than self-sustaining economic growth.

In his keynote speech Mr. José Viñals, Financial Counsellor of the IMF and Director of the Monetary and Capital Markets Department, emphasized that “sharp reductions in market liquidity could act as powerful amplifiers in the event of new shocks.” He also highlighted the need to overcome this liquidity dependence.

The common theme at the Forum was the need for debt managers to maintain flexibility, with many placing paramount importance on greater transparency and open communication with investors. The private sector provided important insights into the ongoing financial regulatory reforms and their associated longer-term implications for debt markets including market liquidity. In addition, differences in the pace and direction of monetary accommodation by advanced economy central banks could have important spillovers.

Against this background, Governor Christian Noyer of the Bank of France noted in his special address that “central banks will retain a complete control over short-term interest rates, despite the expansion of the size of their balance sheets.”

In his address to the forum, European Commissioner for Internal Market and Services Mr. Michel Barnier emphasized that “the new financial regulations would improve the safety of the financial system, ultimately reducing the burden on sovereigns and their taxpayers.”

Mr. Luc Everaert, Assistant Director of the Monetary and Capital Markets Department at the IMF, closed the Forum by thanking participants for their valuable contributions and candid discussions. He expressed special appreciation for the invaluable support received from the host, the Agence France Trésor.

The 2015 Forum will take place in Washington, D.C., and will be hosted by the IMF. Details will be announced closer to the time.



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