ABSTRACT
There is said to be both an abundance of savings in East Asia and profitable investment opportunities in East Asian emergingmarket countries. However, there is a problem of how efficiently savings can be matched with investments within East Asia. One solution might be to establish and activate regional bond markets in East Asia. The establishment of regional bond markets, however, might give rise to another problem: foreign exchange risks. Both borrowers and lenders in East Asia could face foreign exchange risks if bonds are denominated in a foreign currency in the regional bond markets.
