Greco-Roman Lessons for Public Debt Management and Debt Market Development

This paper provides a detailed analysis of the characteristics of the instruments that were used in two countries, their pace of issuance and their impact on the composition of public debt. It notes that the main Greco-Roman lesson for developing and transition countries concerns the transition from an excessive reliance on short-term Treasury bills, held by captive banks, to a liquid market with long-term instruments held, and actively traded, by long-term institutional investors. The transition required moving gradually to medium-term instruments, experimenting with innovation and targeting households and foreign investors, while taking steps to establish policy credibility by lowering fiscal deficits and inflation.

Provided by: World Bank Group Topic: Software Date Added: Sep 2004 Format: PDF

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