Desire to develop Asian bond markets is clearly on the policy agenda of central banks, as the high-profile statements about the Asian bond fund and its local-currency successor demonstrate. Although certainly a positive step, the bond fund is however a $1 billion drop in a $1.2 trillion ocean. Recent research by Robert McCauley¹ at the BIS argues that central banks could play a key role in unlocking the potential in East Asian markets, but to do so would require them to abandon their favourite