Building Local Currency Bond Markets

Why do so many emerging and developing economies still borrow in someone else’s currency, and pay the price in crisis after crisis? And when a corporate bond market fails to emerge even where conditions look favourable, what, if anything, can be done? Building the Curve answers these questions through the lens of demonstration finance: the deliberate use of a multilateral development institution’s balance sheet, patience, and AAA rating to solve the 'first-time issuer problem' that strands nascent local currency bond markets. Drawing on the public record of the International Finance Corporation, the EBRD, the African Development Bank, IDB Invest, the Asian Development Bank, and TCX, Bernard Wilson traces how demonstration issuance, credit enhancement, advisory reform, concessional facilities, and thematic bonds combine to build markets where private capital alone will not move first. The evidence spans four continents. From India’s Masala rupee programme and Zambia’s frontier kwacha bond, to West Africa’s securitisation market, Kenya’s pension fund consortium, Colombia’s biodiversity bonds, Georgia’s lari curve, and Türkiye’s transition financing, the book tests a clear transmission framework against real transactions, and is candid about what the evidence can and cannot yet prove. A dedicated chapter confronts the model’s hardest limit: local currency markets relocate currency risk; they do not eliminate it. Written for practitioners, policymakers, and scholars alike, the book pairs rigorous theory covering original sin, benchmark externalities, and coordination failures with a practitioner’s playbook, organisational design lessons, sector applications in infrastructure, housing, and SME finance, a research agenda for causal evaluation, and discussion questions for classroom use. Part analysis, part field guide, Building the Curve makes the case for patient, public-good capital as the missing catalyst in one of development finance’s most consequential unfinished tasks: giving firms in emerging economies the ability to borrow long-term, at home, in their own currency.