One of the policy challenges is to foster the development of capital markets, especially the corporate bond markets. In emerging Asia, there would be huge financing needs for building social infrastructure such as public transportation, energy supply and communication networks.
In view of the length of financing needs for building infrastructure as well as the risks associated with possible maturity mismatches, a well-functioning capital market, as well as credit intermediation through banks, should play an important role in such long-term domestic financing. Moreover, the co-existence of different financing tools such as bank borrowing and corporate bonds could enhance the resilience of the financial systems.