ADB VP: Without deep capital markets, CAREC potential remains limited

The development of deep capital markets is a fundamental prerequisite for the countries of the Central Asia Regional Economic Cooperation (CAREC) region; otherwise, opportunities for mobilizing domestic savings, attracting foreign investment, and efficient allocation of resources will remain limited, said Yingming Yang, Vice President of the Asian Development Bank (ADB) for South, Central, and West Asia, at a seminar dedicated to capital markets held within the framework of the 59th Annual Meeting of the ADB Board of Governors, Report informs.

According to him, the CAREC-2030 strategy recognizes that the development of deeper and more sustainable financial markets is essential to support economic diversification, strengthen regional interconnectedness, and transition to a low-carbon, climate-resilient growth model.

"The financial sectors of the region's countries are at different stages of development, but share similar structural characteristics: the dominance of banking systems against the backdrop of insufficient development of the non-bank segment, primarily capital markets. Under such conditions, without their deepening, opportunities for mobilizing domestic resources, attracting investment, and efficient allocation of capital, including for the development of green and sustainable infrastructure, will remain limited," he noted.

Yang emphasized that this is precisely why a regional approach is of critical importance. Regional cooperation and integration are among ADB's five priority areas within the medium-term review of the CAREC-2030 strategy.

The ADB vice president also drew attention to the absence of a structured regional platform that would bring together regulators and market participants for the purpose of knowledge exchange and development of coordinated approaches to capital market development.

"In response to this need, ADB supports the institutionalization of the CAREC Capital Markets Development Forum (CMDF). It is envisioned as a specialized regional platform for systematic dialogue, coordination, and cooperation among all stakeholders. Its goal is to facilitate the formation of deep, efficient, and sustainable capital markets in the region through the expansion of interconnectedness," he stated.

According to him, the CMDF will operate on the basis of a cooperative governance model under the leadership of national regulators. With the support of strategic partners, a specialized secretariat, and thematic working groups, the platform will bring together the capital market governing bodies of CAREC participating countries on an equal footing. Such an architecture will make it possible to ensure both countries' engagement in the process and policy continuity, while maintaining flexibility in taking national priorities into account.

"In the future, one of the most important directions will also be building connections with other regions, primarily with Southeast Asia," the ADB vice president added.