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Corina Gochoco-Bautista and Eli Remolona

Going regional: how to deepen ASEAN’s financial markets. Corina Gochoco-Bautista and Eli Remolona. 50th PES Annual Meeting and 37th FAEA Conference Manila, 27-29 November 2012. The views expressed are my own and do not necessarily reflect those of the BIS.

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Corina Gochoco-Bautista and Eli Remolona

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  1. Going regional: how to deepen ASEAN’s financial markets Corina Gochoco-Bautista and Eli Remolona 50th PES Annual Meeting and 37th FAEA Conference Manila, 27-29 November 2012 The views expressed are my own and do not necessarily reflect those of the BIS

  2. Capital mobility: theory and practice • Theoretical benefits of capital mobility • Consumption smoothing • Risk diversification • Investment in countries with better projects • The empirical reality: why dollars are not widgets • Feldstein-Horioka puzzle • Home bias puzzle • Lucas paradox • The costs are very real • Procyclicality, sudden stops, current account reversals • Exorbitant global recycling of savings

  3. What’s lacking in financial markets?Which ASEAN markets are deep and liquid? 3

  4. Evidence of deep and liquid bond markets:Interdealer voice brokers in government bond markets

  5. Markets are information networks:they need critical mass

  6. Government bonds vs corporate bondsASEAN 5, billions of US dollars, end 2010

  7. The big hypothesis: a regional sweet spotThe geography of information versus network externalities in corporate bonds

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