According to numerous studies, there is a strong link between financial market development and economic growth. Thus, the greater credibility of central banks that permits more development of the local markets can have an economic benefit beyond the financial sector. 11 The development of long-term local-currency bond markets may also help governments and firms plan long-term infrastructure and investment projects that boost economic development.
Although such debt markets are only one of many factors that can lower the costs of long-term planning and enhance the ability to undertake long-term investments, the development of these markets, particularly when accompanied by lower real rates, help to support longer-horizon projects and reduce the effect of foreign exchange movements on such activities.