World Bank to push five billion US dollars in local currency debt of poor countries

The World Bank has said it will set up a scale of 5 billion US dollars for the fund to invest in poor countries issue bonds denominated in the domestic currency. It is learned that this introduced for the purpose of retirement funds to the Western countries and the ever-increasing foreign exchange reserves of Asian countries, to the investment risk is considered relatively high investment in the state has increased. The World Bank also hopes to promote the coins to poor countries, rather than US dollars or euros borrowing capacity, and the currency to help reduce the debt of developing countries in the rich countries in the currency exchange rate oscillations sharply, the risks facing their resolve.

According to reports, the fund will invest in the poorest countries of the currency issued bonds, the minimum investment amount of 200 million US dollars. The World Bank plans to invest lock in the first 15 to 20 countries, including those who have already received a great deal of foreign investment countries such as Brazil, Chile, Egypt, the Philippines and Turkey. If the project progressed smoothly, the world will be at greater risk of some investment bonds such as Pakistan and Lebanon, and other countries of government bonds.

The World Bank to fund investors of management fees charged, the part will be used to establish a new bond rating system, which concern not only the solvency of a country, including financial transactions tax and regulatory aspects of economic indicators, the idea is the introduction of one pair of bonds issued by poor countries "investment" of a rating index of these countries and then to put forward a proposal for reform to help them attract investment.

Economists said that over the years, developing one of the biggest financial disadvantage is that they can not use the domestic currency debt. For example, if one of the poorest countries of the euro-denominated issue bonds, then the appreciation of the euro will decline when its solvency. The World Bank pointed out that rich investors bought by the majority of emerging market bonds are dollar and the euro and other major currencies denominated in the domestic currency denominated little. World Bank that funds half of this comes from Western investors, the other half from a huge foreign exchange reserves of Asian countries. The bank pointed out that compared with the purchase of United States Treasury, government investment in the Asian emerging market bonds can be higher returns.

World Bank President Robert Zoellick said the establishment of the domestic currency bond fund is aimed at policy reform and investment between the establishment of clear links.