PIMCO calls for unified Euroland Government Bond Market

15 June 2007

“European governments urgently need to provide the political will necessary to enhance the European bond market”, says Mr. Louanges, head of the European government team PIMCO, one of the largest specialty fixed income managers worldwide. “The Euroland government bond market needs more unification, more harmonisation, more standardisation…and quickly.”

The Euro area comprises 13 countries with 13 different government bond markets, 13 different debt agencies or branches of finance ministries, different definitions for primary dealers, different auction procedures, etc…etc. “National interests – to keep national techniques and national teams busy taking care of them – represent a barrier to market integration”, Louanges argues.

The development of intermediary-sponsored electronic trading platforms has also tremendously facilitated the trading of government bonds in the secondary market. “At a time when large international investors are accelerating their diversification out of U.S. Treasuries and when the euro is becoming a growing reserve currency, European governments urgently need to provide the political will necessary to enhance the European bond market”, he says. “However, the public sector has been slow to make progress in the way it brings its debt to the market.”

Full statement

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