Capital Markets are an integral part of the financial system, providing efficient delivery mechanisms for savings mobilization and allocation, risk and liquidity management, and corporate governance. In addition, they facilitate government debt management, the conduct of monetary policy and provide a channel for privatization. Capital markets can also be a driving force for and benefit from the development of institutional investors (pension funds, insurance companies, and mutual funds), efforts in fiscal decentralization and the development of mortgage markets.
When a financial system relies heavily on its banks, systemic vulnerability increases. The Asian financial crisis provided ample evidence of this. A sound domestic capital market provides market signals on current situations and future expectations. Strong domestic capital markets help ensure the efficient and sustainable funding of governments, corporations, banks, and
large-scale or long-term projects.
Although the capital markets strategic agenda is relatively new within the World Bank, clients receive assistance in the
following areas:
- Policy, regulation and supervision
- Institutional framework and infrastructure
- Bond market development
Reference materials are available in the FSE Library.
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