After the 1997–1998 Asian financial crisis, many Asian economies prioritized building deeper local-currency bond markets. The goal was to reduce reliance on short-term foreign-currency bank borrowing, which had amplified currency and refinancing risks during the crisis. This policy shift set the stage for regional cooperation and new market institutions in the 2000s.
Regional work on bond market development widened through Asia-Pacific cooperation starting in 1998, including efforts supported by the World Bank and the Asian Development Bank. This work emphasized improving rules, regulations, and market infrastructure to support long-term local-currency debt instruments. It helped create momentum for later ASEAN+3 initiatives focused on local-currency bond markets.
Finance ministries and central banks in ASEAN+3 began the Asian Bond Markets Initiative (ABMI) in December 2002. ABMI focused on growing local-currency bond markets so governments and firms could borrow long-term in their own currencies, lowering the "double mismatch" of currency and maturity risks. This marked a coordinated regional approach to bond market reforms after the crisis.
In mid-2003, EMEAP central banks launched the first Asian Bond Fund (ABF1), pooling about US$1 billion to invest in US dollar–denominated bonds issued by regional sovereign and quasi-sovereign issuers. ABF1 was designed as a practical way to identify market frictions and encourage improvements in bond market infrastructure. It also signaled official-sector support for developing regional bond markets.
In August 2003, ASEAN+3 finance officials adopted ABMI and outlined working groups to address key bond market obstacles. The agenda included improving issuance, market access, and supporting systems such as settlement and credit enhancement. This made ABMI an ongoing, structured program rather than a one-time statement of intent.
ASEAN regulators established the ASEAN Capital Markets Forum (ACMF) in 2004 to help build deeper and more integrated regional capital markets. While broader than bonds alone, ACMF supported cross-border market development goals that complemented local-currency bond market reforms. Over time, this helped make issuance and investment conditions more consistent across ASEAN markets.
In December 2004, EMEAP announced the second stage of the Asian Bond Fund (ABF2), expanding from US dollar bonds to local-currency sovereign and quasi-sovereign bonds. ABF2 included a Pan-Asian bond index fund and single-market funds, linking investment products to local-currency bond market development. This reinforced the shift toward local-currency funding across the region.
By May 2005, EMEAP announced ABF2 had moved into an implementation phase, including appointing fund managers, custodians, and an index provider and completing funding of US$2 billion. These steps were important because local-currency bond funds require reliable pricing, custody, and market settlement arrangements. The work helped strengthen supporting infrastructure needed for growth in domestic bond markets.
In July 2005, the ABF Pan-Asia Bond Index Fund (PAIF) was launched and listed in Hong Kong, expanding ABF2’s visibility to market participants. Listing and index-based investment helped improve transparency and encouraged private investors to consider local-currency Asian bonds. This supported the broader effort to increase liquidity and participation in local bond markets.
In May 2008, ASEAN+3 finance ministers endorsed a "new ABMI Roadmap" to sharpen priorities for bond market development. The roadmap focused on (1) promoting local-currency issuance, (2) supporting investor demand, (3) strengthening regulation, and (4) improving market infrastructure. This update reflected a transition from early initiatives to a more detailed, long-term reform program.
On 24 March 2010, the Chiang Mai Initiative Multilateralisation (CMIM) agreement came into effect, creating a multilateral currency swap arrangement for ASEAN+3 members. While CMIM is not a bond market program, it strengthened regional crisis-prevention and liquidity support. A stronger safety net can support investor confidence, which is important for developing local-currency sovereign and corporate bond markets.
In November 2010, ASEAN+3 members and the Asian Development Bank established the Credit Guarantee and Investment Facility (CGIF) as part of ABMI. CGIF provides credit guarantees for local-currency bonds, aiming to help investment-grade companies issue longer-maturity debt. This addressed a key barrier to corporate bond market growth: limited credit enhancement options for issuers and investors.
In 2011, ASEAN+3 finance ministers established the ASEAN+3 Macroeconomic Research Office (AMRO) to support regional surveillance and analysis. Ongoing surveillance helps policymakers identify vulnerabilities early and supports the credibility of regional financial cooperation. Over time, stronger monitoring and analysis can reinforce confidence in local-currency markets by improving crisis preparedness.
In April 2013, the first bond guaranteed by CGIF was issued, demonstrating that the guarantee mechanism could be used in actual local-currency bond transactions. This was an important transition from institution-building to market impact. By lowering perceived credit risk for investors, guarantees can help issuers access longer-term funding in local currency.
By 2015, ASEAN+3 market participants and regulators were promoting the ASEAN+3 Multi-Currency Bond Issuance Framework (AMBIF) to make cross-border bond issuance easier. AMBIF aimed to reduce friction from differing regulations and market practices, helping companies issue local-currency bonds across multiple markets. This capped a 1998–2015 arc from post-crisis reforms to more integrated regional bond market infrastructure.
Asian Local-Currency Sovereign and Corporate Bond Markets after the 1997 Crisis, 1998–2015