A Framework for Developing Secondary Markets for Government Securities

Author/Editor:

Zsófia Árvai ; Geoffrey M Heenan

Publication Date:

July 1, 2008

Electronic Access:

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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.

Series:

Working Paper No. 08/174

Subject:

Frequency:

Quarterly

English

Publication Date:

July 1, 2008

ISBN/ISSN:

9781451870329/1018-5941

Stock No:

WPIEA2008174

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

55

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