Think global, act local; Asian bond markets.(Asia seeks a new home for hard-currency reserves)

Economist (US), The, June, 2006

Asia seeks a new home for its hard-currency reserves

A RARELY mentioned irony of globalisation is that, whereas developed countries are sending more factories and call-centres East, Asia long ago outsourced its capital markets to the West. Asian countries have amassed some $2.73 trillion of foreign-exchange reserves, but rather than invest it in their own region, they have parked it abroad, largely in American Treasuries. As a plentiful pool of liquidity, these funds then find their way back into Asia via institutional portfolio flows and foreign-direct investment.

Increasingly, Asia's politicians are asking whether this merry-go-round makes sense. South Korea's finance minister, Han Duck-soo, told a conference in London on May 24th that investing the...

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