While the bond markets show remarkable growth in Asia, the collateralized money markets, including the repo markets, are underdeveloped, except in Japan. In most of the emerging market economies, repo transactions are largely used for the monetary policy operations of the central bank, while they are rather rarely used between private market participants.
Monetary policy has already played a big part in helping to contain the crisis. But it cannot resolve the crisis – everyone is in agreement on that. And, with the measures taken so far, it has already ventured far into unknown and dangerous territory. It is no secret that the Bundesbank takes a critical view of the ECB’s government bond purchase programmes in particular.