2004年-世界发展银行全球_Greco-Roman_Lessons_for_Public____________Debt_Management_and_Debt_Market_Development_50页_340kb

Financial Sector Development: Greco-Roman Lessons for Public Debt Management and Debt Market Development

Core Content

This paper by Campanaro and Vittas examines the experiences of Italy and Greece in transforming their public debt markets and provides lessons for developing and transition countries. It outlines the challenges these countries faced in the late 1970s and mid-1980s, including large public debt, reliance on short-term instruments, limited institutional investor participation, and high inflation and interest rates. The authors highlight the importance of a gradual transition from short-term to medium-term and long-term instruments, alongside the development of policy credibility and market mechanisms.

Main Findings

• Public Debt Growth: Both Italy and Greece experienced significant increases in public debt, reaching 98% and 110% of GDP respectively by 1990.
• Refinancing Risk: Both countries initially relied heavily on short-term Treasury bills (TBs) held by captive commercial banks, which posed high refinancing risk.
• Institutional Reforms: They implemented reforms to reduce reliance on captive finance and promote market-based instruments, including the establishment of national debt offices and the introduction of auction techniques.
• Market Development: Both countries successfully developed active money markets and secondary bond markets, with the latter focusing on fixed-rate long-term securities.
• Integration into Euro Markets: Their integration into the euro markets was a long-term process facilitated by political commitment and economic convergence.
• Institutional Structure: While Greece established an independent national debt office in 1999, Italy's remains within the Treasury, but both achieved similar outcomes in terms of policy and practice.

Key Policy Lessons

• Transition from Short-Term to Long-Term Instruments: The main lesson is the need to move away from an excessive reliance on short-term Treasury bills held by captive banks to a market with long-term instruments held by institutional investors.
• Gradual Approach: A gradual transition to medium-term instruments and experimentation with innovative financial products are essential for market development.
• Policy Credibility: Establishing policy credibility through fiscal discipline, lower inflation, and reduced deficits is critical for attracting long-term investors.
• Diversification of Investor Base: Developing a diversified investor base is important, but it should be pursued alongside the creation of a robust pension system or insurance industry.
• Role of Institutional Investors: Institutional investors, especially European ones, play a vital role in supporting the development of secondary markets.
• Adaptation to Local Conditions: The sequence of reforms and financial instruments must be tailored to local economic and institutional conditions.
• Mutual Funds and Market Instruments: The use of mutual funds, particularly money market and short-term bond funds, can be a valuable tool for developing debt markets, as seen in Spain.

Instrument Characteristics and Development Timeline

Italy

Greece

Conclusion

The Italian and Greek experiences demonstrate that the transition to a more diversified and market-based public debt management system is a complex and long-term process. It requires a combination of policy credibility, institutional reforms, and financial innovation. While the Greco-Roman model is not universally applicable, it offers valuable insights for countries with similar initial conditions, particularly those with large household savings and weak institutional investor sectors. The paper emphasizes the importance of a phased approach, transparency, and the role of international integration in the development of efficient debt markets.