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Subscription to the Asian Bond Fund 2

December 16, 2004
Bank of Japan

The Bank of Japan has decided to subscribe to the Asian Bond Fund 2 (ABF2) invested in local Asian currency denominated bonds. The Fund will be set up by EMEAP1 (Executives' Meeting of East Asia-Pacific Central Banks) as part of ongoing cooperation among regional central banks.

The amount of BOJ subscription will be up to US$ 200 million.

ABF2 is aimed at promoting the development of bond markets in Asia, building on the successful launch of the first stage of Asian Bond Fund (ABF1) in June 2003.

ABF1 currently invests in US dollar denominated bonds issued by sovereign and quasi-sovereign borrowers in eight EMEAP economies (China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, and Thailand). ABF2, on the other hand, will invest in domestic currency bonds issued by sovereign and quasi-sovereign borrowers in the eight EMEAP markets. Moreover, ABF2 will be open to investment by private-, as well as other public-, sector investors in the future.

The launch of ABF2 represents a historic milestone in central bank cooperation in the region. It is hoped that ABF2 will also contribute to the stability of the financial system through promoting efficient financial intermediation.

  1. EMEAP consists of Reserve Bank of Australia, People's Bank of China, Hong Kong Monetary Authority, Bank Indonesia, Bank of Japan, Bank of Korea, Bank Negara Malaysia, Reserve Bank of New Zealand, Bangko Sentral ng Pilipinas, Monetary Authority of Singapore, and Bank of Thailand.