CONSIDERATIONS ON THE ISSUANCE OF MUNICIPAL BONDS IN ROMANIA
The global financial crisis raised the price of the access to bank loans, a viable solution for financing is represented by issuing municipal bonds. This paper presents the current situation of municipal bons issues in Romania focusing on destination, on costs, on loans’ guarantees and their impact on indebtedness of local government. Local municipal bond market in Romania has a relatively short history, tailored after 2001, knowing that a considerable advance in recent years. The most common reasons for which public authorities are calling for loans are: either in need of cash or in need to balance the budget.
Issues in Development of Government Bond Markets
Developing a government securities market is a complex undertaking that depends on the financial and market system development of each country. For many governments, this involves immense challenges as the problems that inhibit securities market development run deep in the economy. For example, some governments rely on a few domestic banks for funding, which makes competition scarce and transaction costs high. In addition, a proliferation of government agencies issuing securities can fragment national government securities markets. Absence of a sound market infrastructure may make specific actions to develop a government securities market premature. A paucity of institutional investors, low domestic savings rates, and lack of interest from international investors can result in a small, highly homogeneous investor group, contrary to the heterogeneity needed for an efficient market. Furthermore, economic instability, often fed by high fiscal deficits, rapid growth of the money supply, and a deteriorating exchange rate, can weaken investor confidence and increase the risks associated with development of a market for government securities. This paper presents a brief overview of the key policy questions that arise for policymakers seeking to further develop their domestic government securities market.
How should we design deep and liquid markets? The case of government securities
This note presents a list of general principles and more specific policy recommendations for the creation of deep and liquid government securities markets, partly based on the findings of the Study Group on Market Liquidity under the auspices of the Committee on the Global Financial System (CGFS) of the G10 central banks. Many factors affect market liquidity. Institutional factors such as securities law, the regulation and supervision of dealers, and accounting rules are important. Equally, environmental factors such as the macroeconomic situation and changes in the issuer’s creditworthiness play a role. The main focus of this note, however, is on “markets”, especially on market design.