Fiscal and financial credibility has been restored and uncertainties have been considerably reduced, allowing the country to make its return to international debt markets.
But if the U.S. government has lost access to the bond market, the Fed can't pursue a tight-money policy- on the contrary, it has to increase the monetary base fast enough to finance the revenue hole.
In this sense, the long-standing initiatives by governments and central banks to foster local currency-denominated bond markets-- such as the Asian Bond Markets Initiative(ABMI) and the Asian Bond Fund(ABF)-- are highly significant.
If the market predicts a crisis, the effects would appear in the bond market, but interest rates are low, and so it is seems that the possibility of a fiscal crisis is low.
First, it outlines the conduct of money market operations by the Bank during fiscal 2015, followed by an overview of developments in domestic money and bond markets under the conduct of these money market operations.
Now, NY governor, Elliot Spitzer, claims the Bush administration actively and purposefully promoted predatory banking practices which have created the subprime crisis and which is now spilling over into the bond market.
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