A mature and liquid debt market can improve resource allocation by effectively channelling both local and foreign savings into domestic investments and can diversify the investment channels for both retail and institutional investors. Greater diversification of financing and investment channels is beneficial to the stability of financial markets.
Determined and proactive efforts of the relevant government authorities, regulatory bodies and market participants are essential for fostering an environment conducive to the development of the domestic bond market. The important factors influencing the development of domestic bond market can be grouped into five main categories: Government Policies, Regulatory Framework, Market Infrastructure, Liquidity and Risk Management. The following recapitulates the main elements under these five distinct but related areas, which together would provide a key impetus to bond market development.