The Research On Cooperation Mechanism Of Asian Bond Market

The outbreak of Asian Financial Crisis and Subprime Lending Crisis made all Economies in Asia have been aware of that Asian Finance System has many serious weaknesses and problems.A long time, Asia's financial system is highly dependent on the banking financial institutions ,which is not only able to effectively address the asymmetric information problems that occur in financial activities, but also can carry out the allocation of resources more effectively in order to ensure the national strategic industries can get enough financial resources. However, it will have a negative impact on the development of regional capital markets.Lacking of financial products, smooth direct investment and financing channels, a large savings and foreign currency reserve assets can not be effectively translated into the productive investment. It results into Double Mismatch, which means all Economies in Asia have to use short-term deposits support long-term project financing and foreign currency borrowings support local project financing.In order to maintain financial stability and economic development, all Economies have agreed to set up a unified regional bond market in order to make full use of financial resources and promote economies' financial system improved.Asian Bond Fund, which was created by Executives' Meeting of East Asia Pacific Central Banks (EMEAP) in June 2003 and December 2004, is particularly important and feasible. As a means to address the issues of Asian Bond Market, Asian Bond Fund is designed to set up a deep, mature and stable high-flow bond market in Asia. After realizing the diversification of investment and financing system in Asia, we can reduce the impact of International Hot Money, enhance regional mobility and improve financial stability. However, Asian Bond Fund will have a long way to go. In the future, Asian Bond Fund should cultivate the market elements and improve the market environment quickly. This paper shows firstly the status quo of Asian Bond Market, then reviews the launch background, the development process as well as the constraints of Asian Bond Fund. Finally, in connection with the status quo of Asian Bond Fund in China, this paper puts forward China's countermeasures about participating in harmonization of Asian Bond Markets.