Political will drives ABF1

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Political will drives ABF1

In June, the 11-member Executives Meeting of East Asia-Pacific (EMEAP) central banks announced the birth of the $1 billion Asian Bond Fund 1 (ABF1) - something few market observers expected to see so soon.

"It took us a year, which is pretty good by central banking standards," says Joseph Yam, chief executive of the Hong Kong Monetary Authority (HKMA). The idea was first officially mooted by HKMA deputy chief executive Norman Chan at a meeting of the EMEAP deputy central bankers. Thailand was particularly receptive - even more so when its prime minister, Thaksin Shinawatra, heard about it and took up the baton. Out of the blue, newspapers blared out on a subject usually confined to the specialist financial pages. Bond funds were the latest fads.

"I have to admit I laughed when I heard Thaksin talk about it last year and I certainly didn't expect it to come about this quickly," says a senior credit analyst in Hong Kong. The joke involved imagining a country like fastidious Singapore being forced to invest in Philippine paper.

"What is amazing is the growing political will," says Koh Yong Guan, managing director of the Monetary Authority of Singapore (MAS).

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