1 Market Infrastructure Impacting Asian Bond Markets Insights Institutional Clients April 2013 Securities and Fund Services
2 Bond Markets in Asia Pacific China Korea Japan India Thailand Hong Kong Vietnam Taiwan Philippines Malaysia Singapore Indonesia Australia
3 1 Citi Securities and Fund Services Contents Asian Bond Markets 2 Asia Pacific Market Infrastructure - APAC Major Markets 7 ASEAN Markets 11 Major Registration Markets 16 Acronym Glossary 20 Contact Us 21
4 3 Citi Securities and Fund Services Asian Bond Markets The need to further develop the Asian bond markets has been a consistent theme ever since the 2008 global financial crisis. The Asia Pacific bond markets weathered the financial crisis well, and there was no dramatic decline in bond issuance. Indeed, bond markets in Asia continued to grow rapidly, with the size of local currency bond market increasing to USD25.5 trillion as of December 2012, recording growth of 11.0% year-on-year. This was supported by a combination of growth in both the corporate and government bond sectors. s and central banks in the region have also been encouraging the expansion of the bond markets, which has led to growth in the domestic sovereign debt market. The Asian corporate bond market, which underwent significant changes in the aftermath of 1998 Asia financial crisis, acted as a cushion for corporate financing during the global crisis. The markets operated as a balancingact against fluctuating sentiment in global markets as well as slowing banking credit. Foreign participation in the bond markets was encouraged. Interest rate and liquidity risk exposures, as well as promoting borrowing in local currency have been great policy successes, especially in the emerging markets during the past decade. This has fostered the development of domestic bond markets. s and central banks in the region have also been encouraging the expansion of the bond markets, which has led to growth in the domestic sovereign debt market. All these changes have led to a renewed awareness of the need to develop domestic financial and capital markets during periods of turmoil in the international financial markets. Policymakers in Asia have played a major role in developing efficient and liquid bond markets in Asia, as well as enabling better utilization of Asian savings for Asian investments. The policies implemented contribute to the mitigation of currency and maturity mismatches in financing and aim to establish a national and regional market infrastructure for bond market development. Bond market development is significant not only as a way of reducing the region s traditional reliance on capital flows, but also for its contribution to the expansion of domestic demand and as a driver of regional financial integration. As a result of the global financial crisis, there is more government cooperation. The following are some key examples of recent developments in the Asian bond markets: Asia Region ASEAN + 3 Bond Market Forum (ABMF) While significant developments have taken place in the local currency bond markets, intra-regional financial flows are still limited. In order to increase the use of regional savings/reserves to encourage a more active intra-regional bond market, the issuance and trading of local currency bonds is essential because it will channel regional resources to intra-regional investments, and will eventually lead to sustainable and balanced economic growth in the region. The Association of Southeast Asian Nations (ASEAN), along with China, Japan and Korea established the ASEAN+3 Bond Market Forum (ABMF) in September 2010 as a common platform to foster standardization of market practices and harmonization of regulations relating to cross-border transactions in the region. ABMF reports its activities to the Task Force 3 (TF3) of the Asian Bond Markets Initiative (ABMI) under the institutional framework of ASEAN+3 Finance Ministers Meeting (AFMM+3). ABMF consists of two subforums: Sub-Forum 1 (SF1) researched, collated and compared regulations and market practices in the region, while Sub-Forum 2 (SF2) looked to harmonize transaction procedures across bonds market infrastructures in ASEAN+3 markets. National members and international experts (Citi is one of the international experts for ABMF) participated in the ABMF SF1 and conducted a survey on regional bond markets, and the legal and regulatory infrastructures in ASEAN+3 with support from the Asian Development Bank (ADB).
5 Market Infrastructure Impacting Asian Bond Markets 4 Islamic finance is one of the fastest growing sectors within the global financial services industry, expanding at a rate of 10% to 15% per year with signs of consistent future growth. Key output of the organization, which collaborated with the ADB, is the ASEAN+3 Bond Market Guide publication (http:// asianbondsonline.adb.org/publications/ adb/2012/asean+3_bond_market_guide.pdf). The publication raised awareness and detailed how each market is structured, with the aim to encourage more cross-border bond issuance and investment in the region s local currency bond markets. The report covers comparative analyses, as well as bond market guides for ASEAN+3 members. Summary of findings 1 Over-the-Counter (OTC) Market: could be listed on the stock exchanges in many markets, but most of the instruments are traded on the OTC markets. 2 Bondholder Representative and/or Trustee: The concepts of bondholder representative, trustee and commissioned bank are gaining popularity and are evolving. For example, the new Commercial Code in the Republic of Korea, which came into effect in 2012, is redefining the role of commissioned banks. 3 There is an opportunity to propose a common self-regulatory framework for qualified market players in the future, so as to improve properly regulated and exempted private placement markets. 4 Two general approaches are observed in the markets when it comes to public offerings: (1) full disclosure with specific exemptions, and (2) a clearly defined disclosure regime. The key objectives for ABMF Phase 2 will be to facilitate cross-border inter-regional initiatives of issuance and investment of bonds, and it might focus on private placements or exempted markets from full-disclosure requirements across jurisdictions. This might create a professional, organized and well-documented common regional private placement marketplace populated by qualified investors, and where the self-regulation concept would come in as part of discussions about effective governance. Islamic (Sukuk) The value of Islamic financial assets have expanded from USD150 billion in the mid-1990s to USD1.3 trillion in 2011 globally, and reached USD1.6 trillion as of the end of Indeed, Islamic finance is one of the fastest growing sectors within the global financial services industry, expanding at a rate of 10% to 15% per year with signs of consistent future growth. The market has increased since the Islamic Development Bank (IDB) opened in 1975 to finance economic development and foster social progress in compliance with Shariah principles, or Islamic law. Sukuk are one of the most prominent instruments used in Islamic finance, and have been commonly issued for raising funds in domestic and international capital markets. Given the strategic importance and influence of investors from the Middle East, Islamic finance is increasingly in demand by investors. In recent years, several countries in East Asia, mostly those with large Muslim populations, have developed Shariah-compliant products and markets. Markets such as Malaysia and Indonesia had increasing demands for Islamic bonds after they launched their regulatory framework for the issuance of sukuk. Malaysia continues to be the hub for Islamic financial services, while other countries are also launching their own regulatory framework for the issuance of Islamic bonds or sukuk in their respective bond markets, if they are not already in place. In essence, the risk exposure of investors for sukuk is not materially different from a conventional bond. If material difference exists, it is usually disclosed in the offering documents. Pan-Asian CSD Alliance As part of the continuing journey in deepening and strengthening the financial markets in Asia, to facilitate the Asian bond market development and to enhance the attractiveness of Asian debt securities to foreign investors, the Hong Kong Monetary Authority (HKMA) along with a group of central banks and central securities depositories (CSDs) in Asia, formed an alliance in June 2010 with Euroclear Bank and developed a common platform model. The Common Platform Model enables Asian CSDs to improve the cross-border post-trade infrastructure in Asia, to adopt harmonized procedures, shared technology in processing debt securities in a pragmatic and gradual approach, and to establish an intra-regional bond issuance program.
6 5 Citi Securities and Fund Services Demand for dim sum bonds in Hong Kong continues to be strong from investors and central banks who want to diversify their investments or currency reserves into RMB, and to enjoy the benefits of a favorable tax and regulatory regime in Hong Kong. For example, dim sum bonds in Hong Kong are not subject to any withholding tax. Hong Kong Hong Kong is one of the most liberal debt markets in the world. International investors are free to invest in debt instruments locally, and there are no restrictions on foreign borrowers tapping the domestic debt market to finance their business. As of the end of 2012, it had an active and liquid private sector bond market of USD billion, accounting for around 38% of total outstanding Hong Kong dollar debt instruments while offshore RMB (CNH) debt instruments accounted for approximately 46%. January 2007 marked a milestone development for Hong Kong s debt market, when the Chinese government gave the green light to mainland financial institutions to issue RMB bonds in Hong Kong. The Hong Kong market of RMB bonds (known as dim-sum bonds) is the largest outside Mainland China. In 2012, 78 issuers raised a total of RMB 110 billion, which was three times the amount raised in Over the years, the range of issuers in the RMB bond market in Hong Kong has diversified from predominantly the government and banks in Mainland China to multinational companies (e.g. McDonald s, Volkswagen) and international financial institutions (e.g. Asian Development Bank) and even non-bank institutions in Mainland China (e.g. Baosteel). Demand for dim sum bonds in Hong Kong continues to be strong from investors and central banks who want to diversify their investments or currency reserves into RMB, and to enjoy the benefits of a favorable tax and regulatory regime in Hong Kong. For example, dim sum bonds in Hong Kong are not subject to any withholding tax. Hong Kong also remains as issuers country of choice for dim sum bond issuance, as it has the largest pool of RMB liquidity outside of Mainland China. Hong Kong is also playing a unique role in the internationalization of the RMB. During the early part of 2012, the Hong Kong Monetary Authority (HKMA) and the UK Treasury announced the launch of a joint private-sector forum to enhance cooperation between Hong Kong and London on the development of offshore RMB business. On April 18, 2012, the first dim sum bond was sold in London. Hong Kong has also developed a highly efficient and reliable RMB clearing platform, the RMB Real Time Gross (RTGS) system, to support banks from all over the world in developing various kinds of offshore RMB business. The RMB RTGS system in Hong Kong is linked up with China National Advanced Payment System (CNAPS), the large-value RMB payment system in Mainland China. From June 2012, the operating hours of the RMB RTGS system was extended to 15 hours, serving from 08:30 to 23:30 (Hong Kong time). This facilitates financial institutions in different time zones to settle offshore RMB payments through the Hong Kong infrastructure. At the end of October 2012, there were a total of 202 banks participating in the RMB clearing platform in Hong Kong, of which 179 were branches and subsidiaries of foreign banks or mainland banks with an overseas presence. This has formed a global payment network covering more than 30 countries in six continents, capable of handling renminbi transactions between Mainland China and overseas and among different offshore markets. China The China regulator recently allowed more international investors to buy bonds on the nation s largest debt market, the Interbank RMB Bond Market and purchase higher-yielding notes for the first time, as the world s second-biggest economy develops its capital markets. In addition to Hong Kong-based RMB clearing banks, financial institutions and assets managers, the China Securities Regulatory Commission allowed participants in the Qualified Foreign Institutional Investor (QFII) program to buy bonds on the Interbank RMB Bond Market. Previously, the QFIIs were restricted to buy exchange-listed debt,
7 Market Infrastructure Impacting Asian Bond Markets 6 The China bond market is made up of the inter-bank bond market and the exchange-listed bond market. The interbank bond markets is an OTC market and accounts for about 97% of outstanding bond value, as well as 99% of bond trading volume. which accounts for less than 3 percent of the interbank equivalent. There was RMB22.3 trillion (USD3.6 trillion) worth of bonds or securities traded over-the-counter (OTC) among commercial banks and other financial companies via the interbank RMB bond market, as compared with just RMB579.5 million worth of bonds on the exchange-listed market. The China bond market is made up of the interbank bond market and the exchange-listed bond market. The inter-bank bond markets is an OTC market and accounts for about 97% of outstanding bond value, as well as 99% of bond trading volume. The market was established in 1997 and has recorded an impressive average annual growth rate of more than 50% since The main products in the inter-bank bond market include cash bonds, government bonds, central bank papers, policy bank bonds, short-term papers, medium-term notes (MTNs), corporate bonds, local municipal bonds, assetbacked securities, collateral repurchases (repos), out-right repos, bond lending and the like. Currently, policy bank bonds, central bank paper and MTNs are the three most actively traded bonds in the inter-bank bond market. Currently, the interbank bond market has more than 10,000 members covering all types of financial institutions such as commercial banks, securities companies, insurance companies and various kinds of investment companies, such as mutual fund managers and pension funds. Among these, commercial banks are the most active participants. The inter-bank bond market facilitates two trading modes: bilateral negotiations and market makers. The OTC bond market officially introduced the market maker mechanism in 2001 to improve market liquidity and enhance efficiency. At present, more than 25 market makers provide bid-offer quotes for underlying bonds that cover all types and terms. China Foreign Exchange Trade System (CFETS) and the National Inter-Bank Funding Center have been operating the unified trading platform for the interbank bond market in China. CFETS has been operating the interbank bond market since 1997, and is now developed into a unique OTC electronic bondtrading platform in China with comprehensive functions of trade, post-trading service, risk management and information services (e.g. quotes and prices). There is a straight-through processing set-up between CFETS and the China Central Depository and Corporation Ltd (CCDCC) and the Shanghai House through which transaction data is transferred to the settlement system automatically. Citi has been actively monitoring and assisting the market infrastructures in many of these developments. We have compiled a quick summary of key market infrastructure changes impacting bonds to help keep you abreast of these developments in Asia Pacific. We hope that you will find this snapshot useful and informative.
8 7 APAC Major Markets Australia (GMT+10) DST Size of LCY Bond Market (USDBn) 1 1,918 ( 25%, 75%) Bond Volume (USDBn) 1 Bond Turnover Ratio (%) 1 Growth from Prior Year (%) 1 Not available Not available Not available Market Infrastructure Listed OTC ASX * CHESS Austraclear Both Dematerialized * in debt is mainly OTC. Only very small amount of corp debt traded (mainly listed companies convertible notes and interest rate securities). Listed AGBs are scheduled to go live in Mar 2013 (subject to regulatory approval) and settle via CHESS for retail investors. Listed T+3 T+3 OTC T+3 T+3 Issuance Covered : Australia was one of the last developed countries to allow banks to sell covered bonds, with first issue on 16 Nov Australian (AGB): The listing of AGBs on the Australian Securities Exchange (ASX) is scheduled to go live in April/May 2013 (subject to regulatory approval). It will be traded on the ASX in the same manner as listed shares. AGBs will be quoted under ASX market rules. The AGBs will settle via the ASX s CHESS infrastructure in the same manner as equities for retail investors, while institutional investors are already able to invest in AGBs which settle via the Austraclear depository. As part of Australia s implementation of the Basel III liquidity reforms in 2012, regulatory demands for Australian banks to hold more of their capital in liquid government debt securities led the country short on public government debt to meet demands. The Australian Prudential Regulation Authority (APRA) released a response paper on 12 Jul 2012 in relation to the issue of covered bonds and securitization. Australian Securities & Investments Commission (ASIC) has released a Consultation Paper in Jul 2012 to implement the Australian s decision to facilitate retail trading of Commonwealth Securities (CGS) as part of fostering a deep and liquid corporate bond market. Islamic Finance Market Australia s big banks are in talks with regulators on a potential debut Shariah compliant bond offering and making preparations to launch Australia s sukuk.
9 8 APAC Major Markets Hong Kong (GMT+8) Size of LCY Bond Market (USDBn) ( 53%, 47%) (Dim Sum Bond 45) Bond Volume (USDBn) Bond Turnover Ratio (%) 1 (165%), (14%) Growth from Prior Year (%) 1 (-94%), (14%) Market Infrastructure Listed (5%) OTC (95%) SEHK HKSCC CCASS CMU Both Dematerialized A bond can be transferred between CMU and CCASS for clearing and settlement (if it is an eligible listed instrument in both CMU and CCASS). Listed T+2 T+2 OTC T+0 to T+2 (negotiable) T+0 to T+2 (negotiable) Issuance Dim Sum Bond: RMB denominated bonds have developed rapidly since 2010 in response to the growth in demand for RMB. On 14 Jun 2012, the Central issued offshore RMB sovereign bonds for the fourth time since the first issue in 2009, which was listed and traded on the SEHK on 3rd Jul As of the end of 2012, there were 47 bonds denominated in RMB listed on the SEHK. Since 19 Aug 2010, HKEx supported the trading and clearing of products denominated in RMB. Pan Asian Bond Platform: HKMA, Bank Negara Malaysia (BNM) and Euroclear Bank developed a common platform model to provide cross-border repurchase services, allowing banks to use bonds held through the platform as collateral for short-term funding in RMB, USD or EUR. A pilot platform for the cross-border investment and settlement of debt securities became operational on 30 Mar The People s Bank of China (PBOC) has permitted some overseas insurance companies based in China the right to invest in the China interbank bond market. On 12 Sep 2012, HKEx Information Services Limited (HKEx-IS) obtained approval from Chinese authorities to establish a financial information services business subsidiary in Shanghai to enable the delivery of broader HKEx market data products to Mainland information vendors, and subsequently to investors. This will also facilitate Mainland connectivity, and prompted Mainland investors to invest in securities and derivative products offshore. On 12 Oct 2012, the first dual counter (DC) security, the RQFII Exchange Traded Fund (ETF) was listed. One major benefit of a DC security for investors is the convenience of being able to trade in either one of the two currencies, while the benefits for issuers include a wider base of potential investors. Offering investors a choice of trading a security in RMB or HKD will further enhance HKEx s position as a leading international market and Hong Kong s increasingly important role as an offshore RMB centre. Islamic Finance Market The Hong Kong government launched a consultation on the legal and tax framework required to support the development of Islamic financing in the region. In May 2012, the HKMA adopted a four part approach to boost the Islamic bond market, including 1) improving related financial infrastructures, 2) enhancing the international profile of Hong Kong, 3) promoting product development and 4) raising market awareness. Hong Kong also signed a Memorandum of Understanding (MOU) with Bank Negara Malaysia. Pan Asian Bond Platform aims to strengthen the cross-border issuance of, and foreign investment in local bonds in Hong Kong and Malaysia, which will spur trading of sukuk and dim sum bonds, as Hong Kong aims to become China s hub for Islamic finance and offshore RMB transactions. The government has proposed a long-awaited amendment to the Inland Revenue Ordinance and the Stamp Duty Ordinance to give special tax treatment to four common types of sukuk traded globally: ijarah (asset-backed bonds), musharakah (bonds held by multiple parties), mudarabah (bonds held by one party) and the murabahah (in which there is a receivable debt on the sale of goods) to encourage firms to issue Islamic bonds in Hong Kong. The government will submit a bill for lawmakers approval during hearings in Oct 2013.
10 9 APAC Major Markets Japan (GMT+9) Size of LCY Bond Market (USDBn) 1 11,663 (JGB 92%, 8%) Bond Volume (USDBn) 1 11,672 Bond Turnover Ratio (%) 1 JGB (109%), (8%) Growth from Prior Year (%) 1 JGB (-2%), (4%) Market Infrastructure OTC trades only JGBCC JASDEC BOJ JGBs Both Dematerialized * All trading are OTC. Listing only remains on Tokyo Stock Exchange (TSE), but no trading. OTC T+2* T+3 * Domestic trades only; offshore and cross-border trades are T+3 or negotiable Issuance JGBs and Extra Budget: Japanese government bonds (JGBs) are the main bonds issued. Reconstruction JGBs have been issued from fiscal year 2011 to finance the bulk of the spending on rebuilding from the Mar 2011 earthquake. 10-year inflation-indexed JGBs issuance is likely to be resumed after suspension from 2008, with some new product design. OTC-only Market: always traded on an OTC basis, bilaterally between market participants. JBT as Platform: 60% of the OTC bond trades are executed at the Japan Bond Co. Ltd. (JBT), also known as the brokers broker (BB) in the market. Bilateral Netting: Except for JGBCC assumed trades, there is no centralized clearing process for bilateral settlements; bilateral netting by trading parties is the market practice. JGBCC: the CCP acts as the clearing house for the OTC trades, currently utilized by broker/ dealer community only. More JGBCC Coverage Expected: JGB clearing to be fully centralized at single clearinghouse, Japan Bond Corporation (JGBCC) by participating domestic banks, trust banks and brokers in the first half of 2014 to reduce settlement and default risks. Domestic JGB Cycle Reduction: Japan Securities Dealers Association (JSDA) shortened the domestic JGB settlement cycle reduction from T+3 to T+2 in 2012, and there is continuous discussion on further shortening from T+2 to T+1. Tokyo Pro-Bond Market: Previously established as a joint venture, but it now became an in-house market in TSE. It offers flexible and timely issuance of bonds, and provides more convenience to issuers, investors, securities companies and other market participants both in Japan and overseas. Revenue Bond: Effective 1 Apr 2012, revenue bond became Japanese Bond Income Exemption Scheme (J-BIEM) eligible instruments for non-resident investors, to allow tax exemption on interest arising from profit-linked bonds. It is specifically to be issued in the areas affected by the Mar 2011 Japan earthquake. Islamic Finance Market Tax regulations amended in 2011 to offer tax exemptions to sukuk, to bring more investment opportunities for Islamic investors to the Japanese market. JASDEC started to handle J-Sukuk in its Corporate Book-entry System in April 2012.
11 10 APAC Major Markets Singapore (GMT+8) Size of LCY Bond Market (USDBn) ( 59%, 41%) Bond Volume (USDBn) 1 50 Bond Turnover Ratio (%) 1 Growth from Prior Year (%) 1 Market Infrastructure (43%), (not available) (-24%), (not available) Listed SGX OTC CDP CDP Dematerialized, but not for all corporate debts MAS Listed T+1 but commonly contracted at T+3 T+1 but commonly contracted at T+3 OTC T+1 to T+3 (negotiable) but generally T+1 with primary dealers T+1 to T+3 (negotiable) but generally T+1 with primary dealers Effective 8 Jul 2011, Singapore (SGS ) traded mainly with primary dealers (banks) began to trade on the Singapore Exchange Limited (SGX). The initiative provided market investors access to the SGS bond market and prices through the SGX existing infrastructure, rather than rely on SGS bond dealer banks. Since 6 Jul 2012, the SGX was ready to list, quote, trade, clear and settle securities denominated in RMB. In Oct 2012, the SGX began trading of retail bonds (small denomination corporate bonds) targeted for retail investors. Singapore Securities (SGS) are settled electronically through the local interbank payment system MAS Electronic Payment System (MEPS+). Corporate bonds also settle via MEPS+. There are approximately 20 SGS listed on the SGX. They are settled on T+3 basis, unlike the traditional SGS settled via (MEPS) on T+1 basis. On 14 Mar 2012, the MAS announced three initiatives to broaden and deepen the Singapore corporate bond market: 1) to include the provision of swap liquidity to primary dealer banks to handle Singapore Dollar (SGD) debt issuance for foreign corporations; 2) the creation of a lending platform for SGD debt securities; 3) the initiation of a price discovery platform for SGD corporate bonds. On 25 Feb 2013, the government of Singapore released its new Budget Statement extending the Qualifying Debt Securities (QDS) Incentives Schemes that provide withholding tax exemption for non-resident beneficial owners, for an additional five years, until 31 Dec In addition, the compliance requirements for Singapore issuers to be qualified for the Incentive Scheme will be simplified. More details to the proposed changes to the QDS and QDS+ schemes will be released by the MAS by the end of June Islamic Finance Market In 2005, Singapore was accepted as a full member of the Islamic Financial Services Board (ISFB), and in Jan 2009, the MAS launched its first Islamic bond program worth SGD200 million.
12 11 ASEAN Markets Indonesia (GMT+7) Size of LCY Bond Market (USDBn) ( 83%, 17%) Bond Volume (USDBn) 1 26 Bond Turnover Ratio (%) 1 (29%), (12%) Growth from Prior Year (%) 1 (-1%), (42%) Market Infrastructure Listed OTC IDX KPEI KSEI BI Dematerialized Listed T+2 T+2 OTC T+2 (negotiable) T+2 (negotiable) Issuance OTC trading of government bonds began in Sertifikat Bank Indonesia (SBI): Prior to Mar 2011, the issued treasury bills with a three month tenor. SBI was the main tool used by BI for open-market operations to control the liquidity of the banking system and the most actively traded money market instrument in Indonesia. The holding period before investors can sell SBI to the secondary market was extended to six months in May Although IDX provides facility to trade debt instruments in its Jakarta Automated System (JATS), it is not used and instead, market participants usually trade and settle debt instruments off the exchange. ECLEARs The Indonesian and Guarantee Corporation (KPEI) is the only House in the Indonesian capital market. Its clearing system is called E-CLEARS (Electronic System). KPEI has established a STP linkage from brokers to the House in of Shariah government bonds is done through the Bank Indonesia Scripless Securities System (BI-S4), a settlement system for government debt instruments. Bapepam-LK revised the regulation to have fund managers use bond pricing published by the Indonesia Pricing Agency (PHEI), as the mandatory pricing source for fixed income. The Indonesian Pricing Agency (PHEI) began its plan to publish the fair market value (price) of Indonesian government bonds in foreign currency denomination (Indonesian Global ) in Mar Bapepam-LK and the Indonesia Stock Exchange (IDX) plan to establish an Investor Protection Fund (IPF) in 2013 to help players on the capital market and investors in the event a broker becomes insolvent. Onshore commercial banks that participate in the trading of government debt instruments such as government bonds and treasury bills, are in discussion to possibly be eligible to become members of the Indonesia Stock Exchange (IDX). Indonesia s central bank began buying RMB denominated bonds issued in mainland China, joining a growing number of countries moving to add the Chinese currency to their foreign-exchange reserves. Islamic Finance Market In Dec 2010, Bank Indonesia formed a committee with Shariah scholars to speed up the approval process for new products. Indonesian Islamic bond sales are believed to recover from the slowest half in three years as the government finances transport and power projects, which ensure stable cash flows. The government offered as much as USD1 billion worth of dollar-denominated Islamic bonds in the second half of 2012 to finance its budget deficit.