Consolidating the public debt markets of Asia

The large reserves of East Asian central banks have received a great deal of attention (Aizenmann and Marion (2002)). Some observers consider that these have made regional finances more robust and better able to weather sudden withdrawals of capital. Others have criticised the reserves as low-yielding external assets that are accumulated at the expense of higher-yielding domestic investment. Others worry that exchange rate management that gives rise to the reserves might result in investment in the traded goods sector that will prove wasteful if exchange rates subsequently appreciate.