WHY IS THE FURTHER DEVELOPMENT OF REPO MARKETS IN EMERGING MARKET COUNTRIES NECESSARY? – LESSONS FROM PAST EXPERIENCE

Abstract

The repo markets in many emerging market countries were established considerably later than in developed countries. Even though these markets have been growing steadily in some countries, they have not yet developed sufficiently to provide all the possible benefits to different entities, market segments and the financial market as a whole. In this article, the author intends to answer the question: Why is the further development of repo markets in emerging market countries necessary? To answer this question, the author will rely primarily on the experience of developed economies, and to a lesser degree on the experience of developing countries, because the research in which the experience associated with the functioning of the repo markets in emerging market countries is presented is scarce and thereby insufficient to draw a conclusion about the issue. According to the author’s findings, the multiple benefits of repo agreements and the existence of insufficiently exploited potential advantages of repo agreements and repo transactions can explain the necessity of the further development of repo markets in emerging market countries.