Latin American Capital Markets

306 CLEMENTE DELVALLEFigure 10-2 I Sequence of DevelopmentSequence of DevelopmentThe sequence of development of the government bond market has three mainstages: prerequisites, expansion, and maturity. The strength of the financial sector, thesize of the economy, and the investor base exert a substantial impact on developingthe market, and could modify the dynamics of these stages. Moreover, these stagesare not watertight compartments; the development process must be regarded as aflexible framework in which the stages coexist at different points in time. Policymakershave to keep in mind that, in general, corporate market development will tend tofollow the government securities process, and the former is built on the latter It is essentialto begin with a comprehensive view because initiatives designed for the governmentsecurities market will affect on the corporate bond market and ultimatelythe capital market. Figure 10-2 provides an illustration of the policies involved duringthe three main stages of development of the government bond market.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub